Despite China's vast territory and rich resources, including a wide variety of minerals and energy resources such as rare earths, tungsten, tin, titanium, and coal that rank among the top in the world, with particularly advantageous rare earth resources amounting to 44 million tons or 33.8% of the global total, it is still considered a "poor mineral country" for certain resources like copper and oil.
Here, "poor mineral" mainly refers to lower quality, higher extraction costs, and smaller technically recoverable reserves rather than small geological reserves.
According to the technically recoverable reserves, China currently has about 26.2 billion barrels of oil, roughly 3.5 billion tons, ranking thirteenth in the world, which is not very abundant.
However, oil reserves are not static;
with advancements in exploration technology, China annually adds more than 600 to 700 million tons of proven geological oil reserves, bringing the total far beyond 3.5 billion tons.
For instance, the Tarim Basin in Xinjiang has 8 billion tons of proven oil, and the South China Sea basin is estimated to have around 25 billion tons.
In addition to natural oil, China has abundant shale oil reserves.
The global shale oil reserves are estimated between 11 trillion to 13 trillion tons, while the proven natural oil reserves are only 240 billion tons, indicating a vast difference.
China is the third-largest country in the world in terms of shale oil reserves, with about 50 billion tons of proven geological reserves, of which 32 billion barrels, or 5 billion tons, are recoverable with current technology.
This shows that China is not lacking in oil but rather that the current extraction technology cannot meet the demand, and the extraction costs are high.
The oil in the Tarim Basin is buried at depths often exceeding 6000 meters, and in the South China Sea basin, it's under 1000 meters of seawater, making the extraction conditions harsh.
The cost is generally around $50 per barrel, while the global average cost of crude oil extraction is $35, and oil-rich countries in the Middle East have costs even lower than $20 per barrel.
As for shale oil, even the United States, with its most advanced extraction technology, incurs costs of $30 per barrel. China's shale oil quality and technology lag behind the U.S., leading to extraction costs possibly reaching $70 per barrel.
Given these high costs, China's oil extraction does not have a competitive edge.
The current import price of oil is around $80 per barrel and sometimes even as low as $27 per barrel, cheaper than bottled water.
Therefore, China prefers to import cheaper oil while continuing to explore domestic resources for future use when needed.
In practice, China consumes over 700 million tons of oil annually but produces only about 200 million tons, relying on imports for 70% of its needs.
For instance, in 2022, China imported about 500 million tons of crude oil from countries like Saudi Arabia and Russia, spending around $360 billion, which is about 2% of its GDP. Despite the significant expenditure, it is worthwhile because oil is a non-renewable resource.
China has invested heavily in oil imports, constructing three oil pipelines from Kazakhstan, Russia, and Myanmar, transporting 50 million tons of oil annually.
To ensure the supply of cheap oil from the Middle East, China has leased the Gwadar Port in Pakistan and built an oil pipeline directly to Xinjiang.
With the continuous supply of cheap oil from the Middle East and Russia, there is currently no need for China to extensively extract domestic oil, as it is not economically viable.
Only in the event of a future oil crisis would China ramp up the extraction of domestic oil or shale oil to ensure energy security, although at higher costs.
If alternative energy sources replace oil, there would be no need to take such measures.
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