President of BP China talks in Edinburgh about China’s energy future

I attended a talk yesterday evening by Chen Liming, the President of BP China. The lecture was the first in a series of business lectures held by the Confucius Institute for Scotland on the theme of China, Scotland and the world. Chen talked about China’s rapid economic growth over the last fifty years, and the implications of this continued growth for China’s energy future. I’ll come back to some of the more critical issues around this in a minute, but first let me summarise the interesting bits of the lecture itself.

As is often the case with talks like this pitched at quite a broad audience, if one knows a little bit about the topic then there are often few revelations in the content of the lecture. Nonetheless, one thing I was startled to learn that China’s shale gas potential is apparently greater than that of the USA, with estimates varying that the reserves are 30-40% more than those in the States. There are challenges to extracting this gas, though – apparently the reserves are much deeper than the American reserves, hence the cost of drilling is higher. The mountainous terrain in areas like Szechuan Province, Chen explained, means US drilling technology will have to be reinvented. Further, with pipelines under control of a small number of major oil companies, there is seemingly a challenge in getting small and medium enterprises (who played a big role in kick-starting US shale gas) involved in China.

There was also some information on BP China’s strategy going forwards, which will focus on four main fields. (1) Gas – gas in China and for China, both shale gas and deep water gas; (2) Oil production – supplying oil to China via partnerships in Iraq and Angola; (3) Building fuel supply and petrochemical chains; (4) Lubricants – given the rapid expansion in China’s car markets, there is a real need for oils. I didn’t realise that China’s oil and gas reserves are relatively small, hence this need to import from elsewhere (China imports about 10% of energy at the moment) and look at more unconventional hydrocarbons.

The questions were the most interesting bit of all. When I arrived at the venue about ten minutes before the lecture started, a small group of environmentalist students were distributing flyers. To my disappointment they didn’t try to leaflet me – maybe I just didn’t look like I had a draft of a paper on the ethical dimensions of clean coal and unconventional hydrocarbons in my bag… Anyhow, when the floor was opened up after the hour-long lecture, two questions asked in quick succession were, shall we say, more interested in geopolitics and social justice than the technical or economic dimensions of hydrocarbon extraction. BP China’s corporate social responsibility policy was outlined in response, a strategy that seemingly incorporates teaching about energy efficiency and wildlife conservation…

Rather more earnest questions followed on how China’s plans for continued growth and associated energy consumption will sit with climate change targets (the answer is shale gas at the centre of a basket of solutions), how the one-child policy might impact China’s future development (not as much as an uncontrolled population explosion would have), and whether China’s government and planning structures can be flexible enough to handle the development of energy infrastructure (China already has one of the highest expenditures on R&D in the world, the focus is now on improving the quality of that innovation).

Oh, and apparently if you buy a new TV in China, the government will buy your old TV back from you in return. I was also pleased and amused to see the title slide of the presentation had a picture of Mikko Hirvonen’s BP-sponsored 2010 Ford Focus rally car.

Overall a thought-provoking evening, if China continues on this trajectory it raises some pretty big questions about climate change mitigation and the role of consumption in global society more generally.

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