China begins expanding its supertanker fleet

China has begun an ambitious effort to build a fleet of more than 90 supertankers to improve its control over oil imports which are vital to sustaining a booming economy, shipping industry experts say Government strategic planners in Beijing have set a target that half of the oil imports should be carried on Chinese-owned tankers. No deadline has been set to meet this goal, but Chinese shipping companies are expected to order as many as 65 supertankers, worth an estimated $7.1 billion, by 2012, according to transport analysts.
The move by China is seen as an attempt to gain more control over its energy supply. "It is all about national energy security.These ships, in addition to the existing Chinese fleet of 25 supertankers, would have the capacity to deliver about half of projected imports by about 2015.
A tanker fleet of that size would not put China in the same league as Japan, Norway or Greece, but it would be a sharp improvement in its oil shipment capacity. Maritime security analysis indicates that one of the greatest Chinese fears is that oil deliveries could be threatened at a time of international tension or conflict. Supertanker construction is now a priority for state-owned shipyards as China becomes increasingly dependent on imported crude, mostly from the Middle East and Africa. China imports almost half its crude. About 90 percent of these imports come by sea, but Chinese-owned tankers deliver less than 20 percent of this, according to reports in the official state media. Japan, which is totally reliant on imported oil, ships up to 90 percent of its crude in Japanese-registered supertankers, which the industry calls very large crude carriers, or VLCCs. "Japan has more than 100 VLCCs in its national fleet, which means its oil is carried on its own tonnage". Chinese action reflects a desire for security. The main purpose is to ensure a stable inflow of energy,reliance on other countries' vessels, does not promote same scale of national control over the fleet." The two major state-owned shipbuilding groups, China State Shipbuilding and China Shipbuilding Industry, have invested heavily in technology and massive new dry docks to build supertankers. Work started on the first supertankers in the late 1990s, and there are now six yards building these ships for local and foreign owners. Major Chinese shipping companies, including China Merchants Group, China Ocean Shipping, CSC Nanjing and China Shipping Group, have all placed multiple orders for supertankers, with more in the pipeline. However, energy security and the Beijing plan to expand the supertanker fleet remain sensitive subjects for Chinese shipbuilders. Some maritime analysts say that the desire by China to control its own supertanker fleet is understandable but that its sense of vulnerability may be exaggerated. "There is a whole school of thought these days that flags and ownership of ships are almost irrelevant" "The argument is if you can pay the price, you will get the ship and the oil." Chinese energy planners appear to share a lack of faith in the free market and have decided to build a national fleet. "That's a worthy objective and quite understandable." China is already the world's third biggest oil importer, behind the United States and Japan, and its demand for oil is soaring as an energy-hungry economy continues its headlong expansion. The economy grew 11.1 percent in the first quarter according to government statistics, exceeding the average 9.9 percent growth in the past four years. The thirst for oil is increasing almost as fast. In its April 12 forecast, the International Energy Agency, a United Nations body, said that Chinese oil demand this year would increase to 7.6 million barrels a day, a rise of 6.8 percent. Seen in the context of Asia this ambition may have to be viewed differrently. We have the china initiative and thrust for a Pan asian highway through Mynamar thailand bangladesh india and Pakistan it may ahve a very deblitaing effect on the fragile security balances in the region.