China's energy security "sensitive, not vulnerable," says research chief at state oil giant

Lu Ruquan from China National Petroleum Corporation lays out the numbers behind China's 85% energy self-sufficiency and flags the next challenge.

For decades, China's heavy reliance on Middle Eastern crude left its import market exposed to regional shocks. Amid overlapping shocks — from Ukraine and Gaza to a recent "Twelve-Day War” involving Israel, the United States and Iran — China's current energy position is, in Lu Ruquan's words, "sensitive, not vulnerable."

Dr. Lu heads the Economics & Technology Research Institute at China National Petroleum Corporation (CNPC ETRI), the only one among China's 29 nationally recognized elite think tanks dedicated to energy.

On the current energy mix, Dr. Lu did the math on his WeChat blog in July. Coal still anchors the country's energy mix (54% in 2024), keeping overall external dependence near 15%. Renewables have scaled fast (about 1,000 GW solar, 40% of global; 550 GW wind, 45% of global; manufacturing capacity across new-energy equipment, 70% of global).

Oil and gas are the exposure: oil import dependence ~72% and gas ~43% in 2024. But domestic output is rising (crude 189 mt in 2018 → 213 mt in 2024; gas 160 bcm → ~245 bcm), strategic oil/gas storage has expanded, and today's hydrocarbon market is a buyer's market — together pointing to sensitivity without vulnerability.

Policywise, Dr. Lu rejects autarky. He argues for "energy security under open conditions": deep integration with global markets and diversified routes — Russia/Central Asia pipelines, the China–Myanmar corridor, and seaborne flows—treating scale and diversification as shock absorbers rather than liabilities. This diverges from a common framing that casts China's sea-lane and import dependence as an "Achilles' heel," especially around the Indian Ocean and the Malacca chokepoint.

The frontier risk, in his telling, is shifting from barrels to battery minerals: high external reliance on lithium, cobalt and nickel could outstrip the old crude-oil anxiety. The remedy is "keep the stove at home 炉子必须要生在自己家里": command of core technologies, equipment manufacturing, project delivery and resilient supply chains across coal, oil & gas (including shale and deepwater) and renewables.

On Hormuz, Dr. Lu's bottom line is unchanged by current tensions: harassment is plausible, a sustained, total blockade is historically rare and strategically unlikely — enough reason for vigilance, not panic.

Dr. Lu has kindly authorized your host to translate the piece, please find the full English version below.

大变局下中国能源安全问题"再思考"

Rethinking China's Energy Security Amid Monumental Changes

Recently, the "Twelve-Day War" involving Israel, the United States, and Iran has captured global attention, raising concerns about the potential closure of the Persian Gulf and the Strait of Hormuz—the world's most critical energy corridor. There is a palpable sense of unease, as if a storm is about to break. Although a temporary ceasefire is currently in place, the risk of the conflict spiraling out of control remains.

Today, global geopolitical instability continues to intensify, compounded by escalating great-power rivalry, creating an unprecedented period of change.

First, the Russia-Ukraine war, now in its third year, shows no signs of ending. Second, the Palestinian-Israeli conflict has been ongoing for one year and nine months, with little hope for resolution. Third, tensions among Israel, Iran, and the U.S. continue to escalate.

These three geopolitical confrontations in the Eurasian landmass have significant implications for global and China's energy security. Russia, the Middle East, and Central Asia, which are at the heart of these geopolitical storms, contribute roughly 55% of global oil production and 60% of natural gas output. A disruption in this region is felt worldwide, tightening global energy security.

For ordinary citizens, the impact of energy security is tangible. For example, the Russia-Ukraine war led to a sharp rise in international oil prices in 2022, which subsequently increased domestic fuel costs in China. Additionally, past energy shortages, such as the 2007 and 2010 oil crises, the 2017 "coal-to-gas" transition in North China leading to gas shortages, and widespread power cuts in 2021 and 2022, including drought-induced electricity restrictions in Sichuan, all caused significant disruptions to daily life. These events highlight the direct impact of energy security on national well-being and everyday life.

How should we understand "China's energy security"? Here are a few key statistics to consider:

First, China is the world's largest producer and consumer of coal, accounting for nearly half of global coal production and consumption, around 4 billion tonnes. As a result, coal remains the dominant source of energy in China, comprising 54% of total energy consumption in 2024.

Second, China is the largest producer of renewable energy globally. As of the end of April this year, China had installed 1,000 GW of solar photovoltaic capacity, making up 40% of the global total, and 550 GW of wind power capacity, accounting for 45% of the world's total. China's renewable energy equipment manufacturing, including new energy vehicles, represents about 70% of global production capacity. This places China at the forefront of global energy transition and climate change mitigation efforts, especially as the U.S. under Trump 2.0 retreats from international climate agreements and returns to fossil fuels.

Third, China ranks as the seventh-largest oil producer and the fourth-largest natural gas producer globally. However, it is also the world's largest importer of both oil and natural gas. During the 14th Five-Year Plan period (2021-25), China imports an average of 550 million tonnes of oil annually, with half coming from the Middle East and about 20% from Russia and Central Asia. In 2024, China's oil import dependency is projected to reach 72%, a level consistently above 70% in recent years. Last year, China imported about 180 billion cubic meters of natural gas, equivalent to 140 million tonnes of oil, with 40% from Russia and Central Asia and 20% from the Middle East. The country's natural gas import dependency in 2024 stood at 43%, remaining above 40% in recent years. Therefore, any disruption in these regions has a direct impact on China's energy security.

picture by Matthew Henry on unsplash

Therefore, China's current energy-security challenge is primarily about oil and gas. Both the leadership and the general public are highly attentive to this issue. In June 2014, President Xi Jinping proposed a new energy security strategy called the "Four Revolutions and One Cooperation," aiming to address energy security through consumption, supply, technology, and institutional revolutions, along with enhanced international cooperation. In 2021, during his visit to Shengli Oilfield, he emphasized that "ensuring that our country always has control over its own energy supply."

So, what is the state of China's energy security, and can we truly ensure it? Here are four observations:

Firstly, China's energy security can be described as "sensitive but not vulnerable." In other words, while China has a high dependency on foreign oil and gas — making it sensitive to fluctuations in the external environment — the country's energy supply system is not vulnerable. The country has the capacity to ensure its own energy security.

(1) China's overall energy dependency on foreign sources is only around 15%, since 54% of its energy consumption comes from coal, which it does not need to import. Oil and gas account for 27% of consumption, with about 60% imported. Non-fossil energy sources like solar, wind, hydro, nuclear, and biomass, which make up 19% of consumption, are all domestically sourced. Taken together, China has maintained an energy self-sufficiency rate of about 85% in recent years, meaning the country always has control over its own energy supply.

(2) Since 2019, China has implemented a "Seven-Year Action Plan for Oil and Gas Reserve and Production Growth," aimed at increasing upstream investment and boosting domestic production to ensure energy security. As a result, China's crude oil production has increased from 189 million tonnes in 2018 to 213 million tonnes in 2024, with an annual increase of nearly 4 million tonnes. Similarly, natural gas production has grown from 160 billion cubic meters to around 245 billion cubic meters, with an annual increase of more than 10 billion cubic meters. This rise in domestic oil and gas production has helped curb the rise in China's import dependence.

(3) At present and for the foreseeable future, the global oil and gas market is characterized by oversupply. This is the result of sluggish global economic growth, increased supply from major oil-producing nations like Saudi Arabia, Russia, the U.S., and Canada, and a decrease in oil demand driven by energy transition and the development of renewable energy. This has led to a "buyer's market" that is favorable for China's oil and gas imports.

(4) Over the past decade, China has been preparing for potential disruptions by strengthening its oil and gas reserve capacity. A number of national strategic petroleum reserve bases have been established, alongside underground gas storage facilities in the west and north, as well as above-ground LNG tanks along the southeastern coast.

Taken together, in the event of an extreme scenario such as an import disruption, China's domestic production and reserves would be sufficient to meet the basic needs of the population and key sectors like industrial manufacturing.

picture by Karsten Würth on unsplash

Second, China should adhere to the concept of "energy security under open conditions," fully integrating into the global energy market, system, and landscape. This involves diversifying energy import channels to safeguard its energy security.

Despite the ongoing global shift towards de-globalization and unprecedented changes, we are still in an era of high interdependence, particularly in the production, supply, and consumption of oil and natural gas, which are highly globalized. This is evident in the high reliance of major consumption centers such as North America, East Asia, and Western Europe on production centers in regions like Russia, Central Asia, the Middle East, the Americas, and Africa.

In turn, these production centers depend heavily on exports, fiscal revenues, and oil finance from the consuming nations. The oil and gas industry has long been a key driver of globalization, with multinational oil companies like ExxonMobil, Shell, and China National Petroleum Corporation (CNPC), China Petrochemical Corporation (SINOPEC), and China National Offshore Oil Corporation (CNOOC) consistently ranking among the top global corporations.

Thanks to the globalization of the oil and gas industry, CNPC, where the author works, began expanding internationally as early as in the 1990s, seeking oil and gas globally and establishing import and transport channels. By the end of 2024, CNPC has built key oil and gas cooperation areas in Central Asia, Russia, the Middle East, Africa, Latin America, North America, and the Asia-Pacific. Key oil and gas import channels have been successfully established across China through Northwest, Northeast, Southwest, and Eastern maritime routes.

Notably, pipelines like the China-Kazakhstan crude oil pipeline, China-Central Asia gas pipeline, China-Russia oil and gas pipeline, and China-Myanmar oil and gas pipeline have become essential for ensuring China's energy security and serve as landmark projects for the Belt and Road Initiative. In 2024,China was able to import 140 million tonnes of oil and gas equivalent from Russia, 45 million tonnes from Central Asia, 15 million tonnes from Myanmar, and 500 million tonnes from maritime routes. This broad diversification of import channels and deep integration into the global oil and gas landscape are key strategies for ensuring China's national energy security.

Third, under the context of energy transition, ensuring the secure supply of critical minerals has emerged as a new challenge for energy security.

With the acceleration of global energy transition and China's unstoppable move toward carbon peak and carbon neutrality (the "dual-carbon" goals), non-fossil energy will gradually take a dominant role in the coming decades. By 2060, non-fossil energy is expected to account for around 80% of China's primary energy consumption. However, the production, storage, distribution, and consumption of non-fossil energy differ fundamentally from the current fossil fuel supply chain. As such, the notion of "ensuring that our country always has control over its own energy supply" now takes on a new meaning.

This is particularly true in the field of energy storage. The manufacturing of new energy storage facilities depends heavily on so-called "critical minerals," such as lithium, cobalt, and nickel, which are not abundant in China and heavily rely on imports. For example, in 2024, China's dependence on imported lithium was 58%, mainly from Australia and Brazil; cobalt imports accounted for 98%, primarily from the Democratic Republic of the Congo; and nickel imports comprised 86%, mainly from Indonesia and the Philippines.

If traditional non-ferrous metals like iron, copper, and aluminum represented the "old materials" China used to import in large quantities, "critical minerals" for new energy will be the "new materials" that China may increasingly rely on in the future, adding new uncertainties to energy security.

photo by Zbynek Burival on unsplash

Fourth, "energy security" does not mean complete self-sufficiency or halting oil and gas imports. Instead, it means that "the stove must be in our own home."

In other words, the core technologies, project construction and engineering management capabilities, manufacturing abilities, and the industrial and supply chain systems within the energy sector are what ensure energy security.

In the case of coal, China currently possess the full industrial chain's technology and management capabilities and have achieved self-sufficiency, firmly holding the control. In the oil and gas sector, China essentially has full industrial chain capabilities. China has also made breakthroughs in unconventional areas such as shale oil and gas development, as well as deep-water and ultra-deep-water exploration. In the new energy sector, China possesses the world's largest industrial chain and market, which not only meets domestic demand but also exports overseas. Additionally, China is making strides in areas like controllable nuclear fusion and natural gas hydrates, further strengthening its self-sufficiency and capabilities.

Finally, returning to the opening question: if Iran continues to face bombardment from Israel and the U.S., would Iran block the Strait of Hormuz, thereby substantially impacting China's energy security?

Historically, the Strait of Hormuz has never been fully blocked, even during the most intense moments of Middle East wars and Iran-U.S.-Israel tensions. While Iran may retaliate by disrupting the Persian Gulf, attacking oil tankers, or conducting missile strikes, it has never fully blocked the Strait. A complete blockade would place Iran at odds with the entire world, a burden Iran cannot bear.

Moreover, analyzing from the perspectives of "willingness—capacity—consequences," Iran may have the willingness to block the Strait, but lacks the capacity and means to sustain such a blockade. The consequences of such a blockade would also be severe for Iran. More importantly, Iran understands that the U.S. and Israel aim to strike or eliminate its nuclear facilities, not overthrow its government. Unless Iran is cornered, it is unlikely to take the extreme step of "breaking the net" by fully blocking the Strait.

In conclusion, with the world’s largest fossil fuel and renewable energy systems, China is making a unique contribution to global energy security and the energy transition. China is addressing global external uncertainties with certainty in its energy transition and security. Far from being a "weakness," energy has become a strength and highlight as China works towards modernization and a leading energy power.