07-09-04

China's voracious demand for electricity will result in it investing vast amounts in renewables, nuclear and LNG supplies, according to a senior minister.

The forecast has huge implications for Australia's natural gas and uranium industries. Reports from China say that in the first two months of this year, electricity generation jumped 22 % on last year to 385 mm kW while the country had plans to build 130 mm kW of new capacity.

State development and reform vice-minister Zhang Guobao told the 19th World Energy Congress in Sydney that electricity demand in his country had risen a phenomenal 16 % in past 20 months. In Guangdong province, where Australia has contracted to supply $ 25 bn worth of North West Shelf LNG, demand had soared 25 % in the same period, he said.

"The shortage of power is attracting great attention in the Chinese economy," Mr Zhang said. Many provinces had had electricity shortages and the country had restructured its rural electricity grids.

In the past year, 37 mmkW of new electricity generation had been commissioned. The country would continue to use large volumes of coal for electricity generation but domestic supplies could not meet China's needs.

Mr Zhang said nuclear power now provided only about 1.8 % of China's power generation requirements, but by 2020 this was expected to increase to about 4 %. That meant that China had to build 40,000 MW of nuclear power within 16 years.

Mr Zhang said that in China's coastal provinces there would be a rapid move towards LNG. He said natural gas would account for about 4 % of China's energy requirements by the end of next decade.

Australia is one of the world's largest suppliers of uranium, while the North West Shelf project in 2002 won the first LNG supply contract to China, a move which Australian officials believe will allow Australia to win further contracts as the LNG market develops in China.

Mr Zhang also forecast that renewables -- mainly small scale hydro, wind power and solar plants -- would contributeup to 7 % of China's electricity by 2020. The Chinese vice-minister said the prospects for the energy sector were so enormous that China could not undertake an expansion program without international co-operation and investment. There were great prospects for foreign companies and China was looking for foreign investment to the mutual benefit of companies and the country.

He strongly rejected Western analysis that maintains that high international oil prices are a result of China's rapidly increasing demand for fuel.

Mr Zhang said the price surge towards $ 50 a barrel last month was caused by "hot" money in the oil trade, not by over-heated Chinese demand.

He told about 2000 conference delegates that Chinese consumption of oil was still being met by domestic production but conceded imports were increasing

Source: Advertiser Newspapers