According to statistics provided by the US Energy Information Administration, China is the world's most populous country and is now the largest energy (oil, natural gas, coal and electricity combined) consumer in the world having overtaken the United States in total BTUs consumed. Furthermore, it is estimated that China could consume half of the world's total energy production by the year 2020.
It is estimated that China could consume half of the world's total energy production by the year 2020
The tremendous population growth in China, coupled with a rapidly expanding economy, rising personal incomes, and standards of living throughout the country have resulted in an increased demand for energy. In 2008 the country had total oil production of 3.986 million barrels per day with a total demand of 7.817 million barrels of oil per day meaning the country had to import 3.83 million barrels of oil per day. By the end of 2009 oil demand had grown to 8.22 million barrels per day and oil imports were 4.22 million barrels per day (see Figure 1).
A supply and demand imbalance also exists with natural gas. In 2008 the country produced 2.685 trillion cubic feet of natural gas but consumed 2.726 trillion cubic feet, meaning China had to import approximately 40 BCF. In 2009 production grew to 2.93 trillion cubic feet but demand grew to 3.08 trillion cubic feet so imports grew to 146 billion cubic feet (see Figure 2). As the country attempts to move away from its dependence on coal, which is used not only for electrical generation but for home heating throughout most of the country, the need for clean burning natural gas should continue to grow even faster than the economy or the population. As of December 2009, natural gas represented only 4% of the total energy used by China however the government has made a commitment to more than double the amount of natural gas used by the country by 2020. In order for that to happen, China must develop internal natural gas assets such as the projects being developed by Far East Energy.
China has vast reserves of coal and correspondingly vast reserves of coalbed methane. Far East Energy is well positioned as an early entrant into China's rapidly developing CBM market to deliver value to shareholders.
Figure 1 - Click to Enlarge
Figure 2 - Click to Enlarge
Source: U.S. Energy Information Administration