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Context
- The global importance of China’s oil imports will be an increasingly pressing worry for India
What will China do to mitigate its dependence on oil supplies from the Middle East?
- China is the world’s largest net oil importer, comfortably outstripping the US, and much of its crude comes from countries in the Middle East, including Iran.
- China consumes approximately 13 million barrels of oil a day (mbd). Of that, 60 per cent is imported of which 50 per cent (approximately 4 mbd) is sourced from the Middle East
What might be the consequences for India of such actions?
- India has major strategic interests in the Middle East. Aside from its dependence on the region for oil, it has eight million citizens who remit approximately $70 billion annually.
- A convulsion in the region would give India a massive logistic and financial headache.
- This could sharpen into a severe migraine if China were in pole strategic position at that time. China plays a long game. We must track its moves assiduously
What are the alternatives available for the Chinese government?
- The Chinese leadership is fully aware of this chink and has for years sought to mitigate the risk by investing in non-oil sources of energy.
- They have, for instance, committed $340 billion over the next four years to solar and wind. This is more than any other country in the world.
- They are operating 34 nuclear reactors and another 20 are under construction. And they have invested in long-term gas supply deals with Russia, Central Asia and Australia.
- The reason is the surging demand for diesel/gasoline-fueled vehicles. Twenty-one million of them hit the road in 2016 alone. China is the largest importer of crude oil in the world today and will remain so for the foreseeable future.
