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China in Energy World’s driver’s seat

Contributed by OilPrice

By Jim Trippon

China’s growing dominance in the energy world is a key development that no investor should miss. Last year the Chinese overtook the United States to become the world’s number one vehicle market, so it is small wonder that China’s fuel consumption is increasingly important to world oil prices.

Today, China’s powerful National Development and Reform Commission predicted that world oil prices will rise to $80 a barrel this year, up 25% from last year. The current price of oil is approximately $74 per barrel.

China's oil demand rose 15% in December from a year earlier, underpinning a 16% increase in the sale of oil futures from mid-December to January. The International Energy Agency predicts China will need 8.82 million barrels of oil a day up 4.3% from 8.46 million barrels a day last year.

As China’s oil demand rose, PetroChina (PTR) regained its top position as the world's most valuable company from ExxonMobil Corp. (XOM). Based on last year's stock performance, ExxonMobil was valued $323.7 billion while PetroChina's market value rose to $353.1 billion.

Rising oil consumption in China contributed to PetroChina’s rise. But some analysts claim that oil demand is still based on stimulus-backed projects and the real demand may not be apparent for some time while Chinese credit is tightened. China is also consuming huge amounts of oil to fill its immense Strategic Petroleum Reserve tanks.

Vertically integrated, PetroChina is involved in oil discovery, extraction, transportation and sales.

During 2009 PetroChina's shares rose 36% while ExxonMobil shares dropped by 15%. PetroChina reaped $12 billion in net profit for the first three quarters of 2009, down 14% year over year. At the end of September 2009, PetroChina's assets totaled $207 billion. 

As of 2010, China has taken its position as home to the world’s largest oil company and the world’s most productive auto industry.

Jim Trippon,
China Stock Digest Editor-in-chief

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