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Report No. 3391 CHA "LU CO? China: Socialist Economic Development (In Nine Volumes) 3391 Public Disclosure Authorized Annex E: The Energy Sector Vol. 6 June 1, 1981 (reprinted March 10, 1982) East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the WorId Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disdosed without World Bank authorization. CURRENCY EQUIVALENTS The Chinese currency is called Renminbi (RMB). It is denominated in yuan (Y). Each yuan is subdivided: 1 yuan = 10 jiao = 100 fen Exchange rates used in this report are as follows: 1977 $1.00 = Y 1.828 1978 $1.00 = Y 1.661 1979 $1.00 = Y 1.541 WEIGHTS AND MEASURES Chinese statistics are usually in metric units; in addition, mu and jin are often used: 1 mu = 0.1647 acres = 0.0667 hectares (ha) 1 jin = 0.5 kg FISCAL YEAR January 1 - December 31 TRANSLITERATION The Pinyin system is used in this report. FOR OFFICIAL USE ONLY CHINA: SOCIALIST ECONOMIC DEVELOPMENT ANNEX E THE ENERGY SECTOR Table of Contents Page No. 1. OVERVIEW . 1 Energy Production and Consumption . 1 Importance in the Economy .1.. I Historic Growth Rates ... 3 Reserves .... 5 Technology .... 6 Institutions .... 6 Investment Planning ... 7 Pricing .... 9 Energy Consumption in Relation to GNP . 12 Prospects .14 2. COAL ............................ 25 Introduction.. .. .25 Organization . ... .25 Employment Conditions . 25 Production .... ...... 25 Coal Quality .... ....... 29 Transportation .... ... ..... 30 Consumption . 31 Export Prospects . 31 Productivity .... ...... 31 Prospects and Recommendations ... ..... 32 Capital Requirements . .. 33 3. PETROLEUM . 35 Sector Development .... .......... 35 Organization . .......... ... .........35 . Exploration .... .......... 36 Production .... ....... 37 Quality of Crude Oil . .. ...... 40 Equipment and Methods ... ........ 40 Consumption . 41 Natural Gas .... ........ 42 Oil and Gas Reserves . ...... ....... 43 Pipelines and Refineries ... ........ 44 Oil Shale .... .......... 46 Recommendations .... ......... 47 Investment Requirements ... ........ 48 | This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Page No. 48 4. ELECTRICITY . Sector Development . 48 49 Organization . 49 Consumption Pattern . 50 System Description . 51 Fuel Consumption . 52 Capacity Utilization . 52 Demand Management . Prospects and Recommendations . 52 5. OTHER SOURCES OF ENERGY .55 . Geothermal . 55 Noncommercial Energy .55 . 57 APPENDIX . Tables A.1 - A.25 .57 . 84 Ministry of Electric Power: Organization Chart . MAPS IBRD 15524R: China - Power Grids and Major Power Stations, 1979 IBRD 15627R: China - Coal and Lignite Production by Province, 1979 1979 IBRD 15628R: China - Major Oil Field and Oil production by Region, LIST OF TABLES IN THE TEXT 2 1.1 Energy Balances, 1979 ... .. 4 1.2 Energy Production Growth Rates, 1952-80 . 4 1.3 Composition of Primary Energy Production, 1952-80 . 5 1.4 Regional Distribution of Reserves . 10 1.5 Price Comparisons . 12 1.6 Energy Intensity of Major Developing Country Economies, 1978 15 1.7 Alternative Estimates of 1985 and 1990 Oil and Coal Balances 16 1.8 Construction of 1985 and 1990 Oil and Coal Balance Estimates 1.9 Summary Table of Energy Saving and Switching Assumptions for Oil and Coal in the Moderate and High Energy Savings 22 Scenarios. 24 1.10 Levels of Conservation Implied in Demand Projections . Page No. 2.1 Recoverable Reserves of Coal ... 25 2.2 Coal Production, 1955-80 ... 27 2.3 Underground Coal Mines in Operation . 28 2.4 Raw Coal Analyses ... 29 2.5 Coal Consumption by Sector, 1976-78. 30 2.6 Coal Industry Employment, 1975-79. 32 2.7 Major Coal Mine Projects . 34 2.8 Investment in the Coal Industry, 1976-80 . 35 3.1 Crude Oil Production by Region and Major Fields, 1977-80 . 38 3.2 Oil Balances, 1979 . 42 3.3 Natural Gas Production ... 43 3.4 Tentative Estimates of Oil and Natural Gas Reserves. 44 3.5 Output of Principal Refined Petroleum Products . 45 3.6 Shale Oil Production ... 47 3.7 Investment for Exploration, Development and Refineries . 48 4.1 Major Electrical Grids, 1979 . ... 50 TABLES IN THE APPENDIX A.1 Growth of Energy Production, 1952-80 . 57 A.2 Energy Sector Investments, 1977-79 . 58 A.3 Oil Exports, 1975-80 ... 59 A.4 Number of Underground Coal Mines in Operation, 1975-79. 60 A.5 Coal Production by Type and Size of Mine, 1970-80 . 61 A.6 Lignite Production by Province, 1955-79 . 62 A.7 Anthracite Coal Production by Province, 1955-79 . 63 A.8 Bituminous Steam Coal Production by Province, 1952-79 . 64 A.9 Coking Coal Production by Province, 1955-79 . 65 A.10 Employment in Coal Mining, 1970-79. 66 A.11 Coal Exploration Effort, 1970-79 . 67 A.12 Coal Investment by Region, 197 0-80e . 68 A.13 Major Power Stations in China, 1979 . 69 A.14 Electricity Generation and Installed Generating Capacity, 1949-79 . 72 A.15 Hydro and Thermal Electricity Generation by Region, 1970-79 73 A.16 Hydro and Thermal Installed Capacity by Region, 1970-79 . 74 A.17 Generating Capacity by Size of Unit, 1979 . 75 A.18 Power Station Fuel Consumption and Efficiency, 1979 . 76 - iv - Page No. A.19 Electricity Sales by Consumer Category, 1949-79 . 77 A.20 Electrification of Communes and Brigades by Region, 1979. 78 A.21 Electricity Tariffs, 1980 .79 A.22 Electricity Investment, 1975-79 . 80 A.23 Electricity Industry Staff, 1979 . 81 A.24 Theoretical, Exploitable, and Investigated Hydro Potential by Region .82 A.25 Additions to Generating Capacity Anticipated Before 1985, by Region .83 CHART Ministry of Electric Power Organization Chart 1. OVERVIEW Energy Production and Consumption 1.01 China is the world's third largest consumer of commercial energy, following the USA and the USSR, and, at least at present, it produces more than it consumes. Production and consumption in 1979 are estimated at 649 million tons of coal equivalent (Mtce) and 621 Mtce, respectively. Consump- tion per capita, at about 644 kgce, was close to the average for developing countries in 1979 but it is high per dollar of estimated GNP (about 2.5 kgce); the corresponding averages for developing countries as defined in the World Bank's World Development Report, 1980 (WDR, 1980) are about 620 kgce/capita and 0.9 kgcel$. Industry /1 is the dominant energy consumer, accounting for 72% of the "commercial" total. Household and commercial uses consume about 14%, followed by agriculture /2 (6%) and transportation (5%). 1.02 Table 1.1 shows estimated commercial energy balances. Coal is the main source of energy: production in 1979 was about 635 million tons or 454 Mtce./3 Production of oil, the second largest source, was about 106 million tons or 155 Mtce. Natural gas production amounted to about 14.5 billion m3 or 19 Mtce and hydroelectricity to 50 TWh (50 billion kWh) or 21 Mtce. 1.03 "Noncommercial" energy sources comprise mainly rice straw and other crop residues, firewood and animal wastes. Together they supplied 250 Mtce of energy (unofficial estimate), which is comparable on a per capita basis with estimates for other low-income, densely populated developing countries. Importance in the Economy 1.04 The energy sector in China is important not only as a producer of essential products but also as a direct contributor to GNP, as a foreign exchange earner, and as a consumer of investment funds. The sector accounted for about 12% of the 1979 gross value of industrial output in /1 Including here mining, but excluding electricity generation, which is generally counted as part of industry in Chinese statistics. /2 The data for agriculture include rural consumption of electricity in brigade industries, other sideline activities, and household and commercial uses; in oil, where agriculture is computed as a residual, they probably also include oil used in construction. /3 Assuming, in the absence of an official estimate, that Chinese coal averages 5 million kcal per ton, compared with 7 million kcal per ton of "standard" coal or "coal equivalent." - 2 - Table 1.1: ENERGY BALANCES, 1979 Total Noncom- Natural Electricity commercial mercial Coal Oil gas Hydro Total energy energy Total (mn tons) (bn m 3 ) -- (TWh) -- Primary Production 635 106 15 50 n.a. Net consumption 630 89 15 n.a. 282 Power system 111 17 2 n.a. 43 Industry 385 43 13 n.a. 184 Transport 25 14 n.a. 1 Agriculture and other .. 14 n.a. 38 Domestic and commercial 109 1 n.a. 15 Exports 5 17 n.a. -------------------------- (Mtce) -------------------------- Primary production 454 155 19 21 n.a. 649 250 899 Net consumption 451 130 19 n.a. 119 621 250 871 Power system 71 25 2 n.a. 18 18 0 18 Industry 289 62 17 n.a. 78 446 n.a. 446 Transport 12 21 .. n.a. 1 34 n.a. 34 Agriculture and other .. 20 .. n.a. 16 36 n.a. 36 Domestic and commercial 79 2 .. n.a. 6 87 250 337 Exports 3 25 .. n.a. .. 28 - 28 Notes: Mtce defined as 7 million kcal. Calorific values assumed as follows: Coal (overall) 5,000 kcal/kg Coal (used in power plants) 4,476 kcal/kg Coal (used in industry) 5,250 kcal/kg Coal (used in railways) 3,370 kcal/kg Coal (remaining) 5,090 kcal/kg Crude oil and oil used in power plants and industry 10,200 kcal/kg Oil used in other sectors & refined product exports 11,400 kcal/kg Natural gas 9,310 kcal/m3 Hydro and electricity 2,954 kcal/kWh Double-counting of electricity and the primary energy forms from which it is produced has been avoided in arriving at totals.