Energy companies need to rethink China strategy

Global energy companies should be engaging with China in a more comprehensive way to help the country meet its monumental energy challenges, according to the latest research from the Boston Consulting Group.

by Boston Consulting Group
Last Updated: 23 Jul 2013

Although foreign participation will be necessary to help China achieve its energy goals, the existing relationship between the country and overseas firms is characterised by an ad-hoc, project-oriented approach, the report finds. This benefits neither China nor its potential partners, it warns.

Rather, energy companies should be engaging with China in a more comprehensive, big-picture way - lending capabilities, resources and knowledge on a scale that helps the country solve its biggest challenge of achieving energy self-sufficiency, the report says.

"To continue to grow, China may not only increase imports of crude oil, refined products, petrochemicals, coal and natural gas, and, at the same time, improve production capacity, but it must also improve energy affordability and efficiency and protect the environment," said Brad VanTassel, a vice-president and director at BCG's Houston office and a co-author of the report.

"Accordingly, the government will be less and less likely to approve project participation by foreign energy companies that doesn't advance solutions to these big challenges. But the government may arrange superior terms for companies whose participation is comprehensive, reflects their ability to invest in extensive capital projects, helps improve domestic exploration and production, and contributes to the development of unconventional energy resources, such as tar sands and other frontier resources.

Source: Boston Consulting Group
Unlocking China's Energy Potential

Reviewed by: Nick Loney

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