 Wythech chi'n gwaith enghraer ers ymlaesu newyddu yn sessu wych? That is of the largest user of commercial energy in the world. It's the second largest importer of oil, it is growing importer of gas. The world's largest emitter of greenhouse gases from energy. It's the major player on the international coal markets. Its national oil companies are the biggest investors around the world y dyfodol yn gyfnodol. Yn ymgyrch yn y cyfnodol, mae'n meddwl y cyfnodol y cyfnodol yn y cyfnodol a'r cyfnodol yn y cyfnodol. Yn y cyfnodol, mae'n gweithio, mae'r ddweud o'r cyfnodol o'r nexen o'r cyfrifiad o'r Cyfnodol Llywodraeth Cymru yn y cyfnodol yma, yn y Cyfnodol. Yn y cyfnodol, mae'n gwybod i hyn, dyma. Yn y cyfnodol, mae'n gweithio'n gweithio'n gweithio'n gweithio o'r ffordd gwneud felly yn y cyfrifiad oherwydd o'r cyfrifiad yng Nghymru, yna'r gweithio allan a roeddan i'r cyfrifiad cyfrifiad yma. Felly, mae'n wok Trevor o rhan o'r llefudd o fyfyr landing o'r ei drwyll�ography o ddisgu o ryweddol yn rhan o'r rheth i wneud bod ymweld ymddangos yn ysbryd yn 1980 fel ymddangos. Rwy'n dduch cyflawni yn rhan o'r 10 mae'n mynd i ddweud bydd yr ysgrifennu sydd ymddangos yn eiddo i'r cyd-fyniad a'r cyflawnu a'r cyflawnu yn cyflawnu yn ysgrifennu yn yr ymddangos, ac mae'r cyd-fyniad yn gwybod yn eich bod yn ysgrifennu i'r cyflwyth ar gyfer y gaf, ac mae'r ganddoedd yn dweud â'r drefnol iawn, yr un 85% o'r llyfr yn ei wneud o'r sgwpeth Cymru yn unrhyw mwyaf i'r rhesawdd i'r bwrdd. Mae'r ganddoedd â'r drosio yn rhoi'r ganddoedd yn garaeon i'r cyffredin ar y cwm. Rwy'n dechrau am y 1 yw mae'n bwysig. Mae'r bwysig. Rwy'n credu'r cyffredin a'r 20 oed, Cynrygiad cyfrwyr yn ychydig a'r llyfr yn gwneud. Yn 70% yw'r llyfr yn gwneud o'r llyfr, our images are as primary energy supply. Oil will stay roughly 17, 18%. What has grown in this growing is natural gas, now up to 4%. Hydroelectricity stays at around 6% and that just depends on how much rain there is. At the bottom, just starting to appear is significant on nuclear and renewables. As I was explaining at lunch, you hear about the huge scale of China's wind farms or whatever. a dyna'r unigau yng Nghymru yn ymddi'r llwyddiad yn yw'r lleol. Mae'r unigau, ac mae'r unigau yn ymddi'r Llyfrgell. Ac mae'n gweithio'r oedd, yna yma yma yw 1980-2011, yn ei wneud o'r oeddiad yn y gweithio yma, ac yn y ddweudio'r oeddiad, yw'r llwyddiad yn y ddyn nhw'n dweudio'r oeddiad. Ydyn nhw'n dweudio'r llwyddiad yn 1993. Yn 1993 mae'r urchyn oedd oedd ymgrifiaid gyda'r ysgrifennu yma yw Chynau yn ein bodai'r plwer o'r oeddiad. spellu'n y 80-a, a'r 70-a, chynau eu gyfraglwydau cheim wartwaith. Ac mae'n Mae'r bwysig yn ddoch. Chine wedi'i gwneud i'r union yma i'r ysgol yma o'r oedd o'r ffordd. A'n dweud yma i'r rhai linell, ac o'r linell o'r llun o'r llun o'r rhaid. Rhaid i ddweud yma'r llun o'r llun o'r rhaid. Mae'n eu ddweud o'r reifnod o'r reifnod o'r sector. Yn ystod, mae'n ddweud o'r llun o'r reifnod o'r reifnod o'r reifnod. Ie was partially industrial policy in order to build their own refining business and employ lots of their people.but this gap is large. Some 56-57% of China's oil needs are now imported and that is going to continue growing for the foreseeable future. If we look at a natural gas we have seen that really this is... ..an natural gas production in China has only started to pick up... Really in the last 12 years. Back in the early days there were a couple of parts of China that produced gas and well I used to work for Being in China in 1990s and there was no point in producing gas in China, you wouldn't get any money for it, nobody was interested, they just wanted the gas to make the first Lancer with. This then started to change in the late 90s and as you can see they've been exploring the production, the blue line is going up very rapidly, their consumption is going up more rapidly and they are ond o'r cyfnod gwirio'n gweithio'n gwasiad yma, ac yn byw'r byw i'r gwasiad. Yn cael ei wneud ar y cael ei wneud, mae eich dweud o unrhywgwm mewn ei aeth, ac mae'n gweithio'n gwneud yr argyn, mae'r gweithio'n gweithio. Mae'n gweithio'n gweithio'n gweithio'n cael ei wneud yn cael eu llwyddoedd yr oedwch yn Chynyn. in China unless there are radical steps to move away from oil to electricity or to gas. In the gas sector, the picture is more confused. The priority in natural gas for China is not electricity, it is city gas and we were talking at lunch about pollution and one of the things they have done is to get rid of the particularly North China, the district heating systems that were gyda'r bwysig o'r cael ac yn gandol i'r gandol yn bwysig a'r ddweud o'r holl yn gandol. Ond bywch gandol, o'r ddweud, ac o'r rhagorau sy'n gallu hyn yn llwy, ond ond y problemau gyda'r bwysig o'r gandol yn cael ei fod yn ddweud. Rwy'n cael ei gandol yn gandol yn chynnyddiol. Felly, ydych chi'n gallu rhagorau sy'n gandol, dwi'n ddweud o gandol yn gandol, bobl yn cael rhai, oherwydd mae'n gandol o'r rhagorau. Felly, we have looked back. Chynau can see the challenges. More and more gas imports, more and more oil imports, more and more energy demand for all sorts. So here is a slide, and well, obviously today we are focusing on the right hand column, but we still need to start on the left hand column to understand what is China's domestic energy strategy, and rather like America it is, let's maximise production of domestic resources, Wether that be oil or gas or coal or hydro or whatever, but particularly when it's oil and gas, it's oil and gas reserves. Maximised the refining capacity as we've already seen. Build the pipelines to move oil and gas around the country, have ports for importing. Build storage... A lot of oil can be imported into China is going into emergency storage for the first time. mae gennych hi'n bwysig ar gyflym ac yn ymgyrch, sent mae'r ei chyflol rydyn, mae'n bwysig ar gyflym ac yn bwysig! Mae bod gennych hi'n bwysig i'w ymgyrch yn gweld ei gweld i'w ffordd i ffwrdd, yn 3 o 4 ar gwasanaeth oherwydd y maes y cyfrifradau mae rhai cael ei gwrs wedi ei ddacol i'w cysylltu'r licwys ac yw'r llungellwyr am y gallu bwysig ar gyflym. Mae twelio rydyn ymgyrch ar gylwyr ribbon, ken Laurys-X comments of vehicles and emission standards, but these aren't always being followed. There are growing numbers of gas and electric vehicles in the cities and rather late in the day, some of the cities are working on urban mass transport systems. But, at the same time, anybody who's been to China here... right? okey? You've all been to the big cities and sat in traffic jams, yeah? Llywodraeth yma hond yn fawr, roedd y carn yn gweithio. Felly mae'n cyfan gymoedd y cyfan y carn, cyfan o'r ffordd o'u cyfrannu, pum y cyfrannu, cynnyddio'r cyfrannu ac yn cael gol y pwlad yn rhan. gyda'r iawn o'r wahanol. Mae'n fod yn ddau'r peth yn ei ddweud, ond mae'n rhoi'r iawn ar y ddweud. Y prysau o'r litr am gaseilu yn Chine yn ymwyfydd yn ei ddweud i'w'r USA. Sorry the government is starting to push up the oil price to make people pay for it and to make people think before they use it. So that's the domestic policy. The overseas policy we're going to go through a bit more slowly and I've got slides to illustrate many of these so I'll blend it and then look a little more into the detail. Diversifying imports. I'll have a graph that shows how China draws in its oil imports particularly and gas imports more like for the world. camps as it does as an economy that was once planned where the economy is driven by the government. China prefers government to government deals, long-term contractual relationships rather than reliance on stock markets. And it feels insecure over land imports depending as it does on oil coming through the South and East China Seas so it likes overland imports. I will show you one as 같은데… Yn ymddych chi'n ddweud o'r cyfliadau oedd, yr unrhyw ymddych chi'n gyffredinol, yn ddiweddol i'r bwrthach o'u cyfrifio. A'r byd ydych chi'n meddwl am ysgrifennu ar gyfer, ymddych chi'n cyfrifio ar gyfer o'r cyfrifio. Roeddwn i'r ddechrau lluniau yn y cyfrifio cyfrifio, ymddych chi'n meddwl i'r cyfrifio CMPC. Ac oeddwn i'n ddweud â'r cyfrifio, ac yn 1998 mae oedd 1.5 miliwn yn ymddiad. ...yndd yn yw'r cyfrifordd yma, mae nhw rydyn ni efallai ei wneud hwn arlaedd. On i'n erioed, rydyn ni'n 1,6 plnidol, a rydyn ni'n rydyn ni'n fewn dyfodol a ddydd yma o'r cyflawnynwyr. On i suppwysb, ondd y ddin yn llunio o'r brwystef coch o ddyddwyd yma yn arnod o'r cyfrifordd rydyn ni wedi eu gwiridol. Rydyn ni wedi amser yr oedd yn meddwl i'r holl… O'r ffordd o'r cyffredig a'r entrepreneurship yn ymddangos i'r Prifysgrifedd o'r Ffordd. A wnaethau'n gweithio yn ymddangos o'r cyffredig ar wrth criticio o'r ffordd oír hwnnw o'r gyffredig o gyffredig i'r hwnnw. Ieith ymmuno, nawr yw shefion yma, yw cyffredig o'r parw'rwymiar strategy o'r rhwynebu ar y lwybod, o Benazweil ac o'r Kazakhstan o Angola. and a whole raft of other strategies that support either deliberately or not through intent this overseas oil policy. I'm going to illustrate some of these points with pictures now. We look at the details of oil trade. We see the top line, the crude oil import and the oil product import are much flatter line here and you see at the bottom A yw'r gwerth yma, mae wneud hanes o oedden ni'n credu oes eu hunain, a mae'n cael ei gafod o'r cwmhreit ar gyfer Japan a felly mae'r cwmhreit oedden ni, mae'n pwysig o'r cwmhreit a ddim yn rhan o'r hyn oedd yn cwmhreit. Mae'n cwmhreit o'r cyfeu'r pwysig. Yn cael ei gwybod, mae'r cyfeu'r cael ei mwyfynu wedi'u gafodol, fewn byw i'r hawdd, dwi'n meddwl i'r llwy atio hyn. Lleur yar iddo o'r ddweud o gymhau maen nhw oedd yn squelraethau i'r maen nhw. Fe cofawr ar y cyhoedd, oedd yn cael ei hiveid o gyfavwyr, a'r ddweud o'r ddweud o'r paen nhw o'r ddweud yn gweithio llwyr datganiadol yn cynnwys. Roedd yma. Fo'r ddweud iawn ag y ddweud o'r ddweud o'r ddweud o'r cych-un? Rwy'n cael ei gwelio'r ddweud o'r ddweud o'r brudd llwy. ffordd yma prevention diwethaf. Rym ni'n iawn i ddim ni'n gweld y drwnghyn ganio. Y cwestiwn y 90 yn ddechrau Asia Pacific, ac yn Indonesia. yna Rhyw Myl-Aza-Ryf, mae'r ffilmfyniad lle yna y ddefnyddio'r wrth unig, ac yn Malaysia i Indonesia, mae'r cofrwyd yn gymgyrch yn ddechrau. Ymgyrch yn ydym ni'n ddim ni'n wgwlla, ac yn ymgyrch yn dda. Mae'n ddim yn dechrau Chynai i ddim ni'n ddim ni'n ddim ni'n ddim ni ddim ni. The Middle East stays at about 45-50%. Africa is the one that has grown hugely, particularly West Africa and Sudan. Eurasia is Russia and Kazakhstan, two neighbours where the oil comes into the pipeline, and the Americas, mainly Venezuela and Colombia. So, there are about 30 or 40 countries now that supply China with crude oil. If we look at the future oil demand or oil import requirements, what we see these, the world energy outlook, and probably Ed Chow shared some of these with you last week, we're at 2010 here, we've got sort of high demand or lower demand depending on how green they're going to be, and here is production, okay, so I don't know where production will be in 30 years' time, but the geology is not good and most of their fields are depleting. So China's oil production is unlikely to go up, it's most likely to go down, and so this gap between production here and future demand is just going to go bigger, at least over the next 25 years or more, unless there is some radical measure to deal with transport policy. If we look at gas imports, essentially there was no imports until 2006 when China opened its first liquefied natural gas plant in the southeast, and so they've been building more and more LNG plants and will continue to build, and the first pipeline is from Turkmenistan. And if you look at the geographical regions they get their gas from, obviously the CIS, former Soviet Union is the Turkmenistan pipeline, and then you've got Southeast Asia, Australia for natural gas, very important in Indonesia, some gas coming from Nigeria, gas from Gata in the Middle East, and a bit of gas from North America. So again, with gas they're importing from all over the world, and will continue to do so and with oil. Projecting future gas demand and future gas imports is very difficult, and I was going to show the IEA forecast but it doesn't make sense, so I'm not showing it. The problem with gas is that the supply and the demand because of the infrastructure needs are much more closely related and therefore highly dependent on policy actions by the Chinese government. So there's no point too much in trying to predict what it is, and here we have projections of future gas imports, LNG pipeline imports, all you have to notice is the numbers are big and there's a huge range of estimates. So basically we don't know. Underneath this is one big unknown that we were talking about at lunch, which is the shale gas, you will have heard of how in North America there's been this shale gas revolution through horizontal drilling and fracturing, you can bring gas from shales where you weren't able to before, and this has revolutionised not only the US gas market but will change the global gas market. China has a favourable geology. I think the big question is will the political economy of energy in China and will the regulations and administration allow that gas to be exploited quickly or not? To date the signs are not too favourable but they're not really unfavorable. I was in Indonesia last week looking at Colbert Meat Lane and there it's really unfavorable. So I think probably in China we will have a slow pickup but they will get there in the end. So we got huge uncertainties in China's call on international gas markets. The only thing we do know is that it will, like with the oil markets, it will become a major player in global gas markets and in regional gas markets. Here's a map to illustrate some of these factors. What do I press to get a light rather than the middle one? The middle one. Right. I can't see it. I can't see it, right? OK, but if I can't then I can't write the one that is obviously in obscure colours. It's really a disaster. OK, so you've got China here. I've done it schematically, but the first major pipeline coming in was from Kazakhstan, from the Caspian Sea, bringing oil into China. That's a long way. It's got to go even further to get to central China. Some of the oil in this pipeline also sometimes comes from Russia. Then you have the Turkmenistan gas pipeline that comes from Turkmenistan across Uzbekistan, Kazakhstan, and then into China, and then goes all the way to eastern China through a series of pipelines. There is also now a Russian oil pipeline bringing oil actually from west Siberia into northeast China. Later this year two pipelines will open across Myanmar, Burma. One is bringing gas exploited in Myanmar, produced in Myanmar into southwest China. The oil pipeline will essentially bring any oil from any ship that comes in here across and therefore avoiding the Malacca straits. So China has over the last six years built up quite a substantial strategic network of pipelines that reduces its dependence on the dash lines which are the sea lanes of communication which brings oil from the Middle East or from West Africa. Through the Malacca straits, through the South China Sea, even through the East China Sea up to the major import terminals along the East Coast. The yellow dots are symbolic indications of where the liquefied natural gas plants are, bringing in gas from as you've seen all over the world. What you don't have is a gas import pipeline from Russia. They've been talking about it for not 20 years. Give them time. Give them time. The Russians are not easy to negotiate with neither of the Chinese. Anybody who's still looking at the slides should be thinking, what are the black dots? They are ports being built or built by the Chinese. These two are on Chinese territory, the rest are not. In Myanmar, in Bangladesh, Sri Lanka and in Pakistan, these are large ports that could necessarily be used by a future Chinese navy to protect its sea lanes of communication. We now move to the overseas investments because this is often what makes headlines. They started in the early 90s as China was just becoming a net importer of oil. These were small projects of little significance, except it gave the companies a chance to try out their skills and learn about working overseas. In 1997, you then had some big onshore projects, Sudan, which you will have heard about, Kazakhstan, Iran and Venezuela. Gradually in the 2000s, they started to widen their scope, Deepwater, Tarsans, LNG and some active merchant acquisitions buying up smaller companies. 2008-09 marked again a few big investments and it's interesting. The global recession meant something quite different from the China's oil companies than it did for our oil companies. I met one of my students, senior manager in CPC Christmas 2008, and I said to him, what does the recession mean to you? He said, this is a great opportunity. You can see this from 2009. China has been on a shopping spree with deals worth billions of dollars at a time, buying up major assets, mainly in the Americas for the first time, and buying from Western companies who need like BP that I used to work for, but needed to sell either because they had a gas accident in the Gulf of Mexico or otherwise they needed some more cash flow. Billion, 10, 20 billion or so has been spent in the last three or four years, mainly in the Americas by the two or three top Chinese oil companies, including in Britain, Petro-China buying a refinery up in Gragemouth, buying Nexen, which it makes it the largest oil producer in the UK North Sea, and Sino-Pek buying Canadian Talisman, that also makes it the significant player in the North Sea. Getting big in Australia as well. So they stopped investing new big projects in developing countries or in countries which are provider states. If I wanted to use the word, they're now moving in big time. The quantity of oil they produce, 64 million tonnes, something over a million dollars a day they produce from these overseas fields, which is about 20% of their total domestic production. So it's significant. But what's important to know is that oil doesn't necessarily go back to China. Most of the time the companies sell it where they can get the best value for money. Here is a summary. Feel it, you don't need to read it, as to the number of countries that these companies are invested in. In bold I've highlighted my judgement of where the biggest investments are. I was realising looking forward that I've got the United Kingdom under Uzbekistan. I'm not quite sure why that fits there. But I had CIS in Europe and there was almost nothing in Europe until the recent investment. What's interesting about this, as I say, I've been building up this slide for about eight years. I used to have percentages at the top to indicate rough percentage of the distribution of investment. Until four years ago, America's was 5% of total overseas investment. Now I've got it as number one. This is where the dollars are today are in the Americas from Chinese national oil companies. I'm going to end or near end this by saying, why is this happening? Why are these companies going out all over the world throwing these billions around? I identify four sets of players, each with different sets of objectives. The Chinese government, the Chinese national oil companies, the host governments wherever they are and the host national oil companies. The key, I think, is if we start with the national oil companies, it's very simple. Until at least the shale gas revolution might start. The amount of oil and gas to be found in China remaining was very small. So if you're a big oil company, you have to get out. There was no future in China. So the national oil companies ambitions are very clear. Get out, build new business, get new reserves, new production, new profits. Otherwise they're going to disappear. So basically business. Also avoiding tight governance and price controls. You're sitting on the other side of the world. Governments may be a little looser. Certainly more country you're in, but certainly you're away from government price controls. You can send sell stuff directly into the market. I think what is interesting and is particularly in the case of the North Americas and South America is technology and skills. This isn't just catch up. It's now they're buying into the unconventional gas, the deep water offshore Brazil, the unconventional oil. They are going to be at the frontiers of oil and gas, but they are then going to be able to take back to China to exploit their shale gas. For the government, it was a mix. There was this belief several years ago that still lingers on that if we have a Chinese company overseas that has an oil field this somehow enhances our security of oil and gas life. It doesn't. Oilfield in Sudan and Angola, if the Malacra Straits are closed or there's a war in the South China Sea, does nothing for you. But they still believe it. More important is industrial policy. They chose a few sectors and say, we want these companies to be major international players. That makes a lot of sense. Social policy implement, as I say. CNBC still has one and a half million people. Financial policy, it brings in foreign exchange. The oil companies are verby is tax payers in the Chinese economy. And it's an arm of foreign policy. It allows you to go into areas that you wouldn't otherwise do. And I think the fact that China has three major projects in Iraq is not just due to national oil company ambitions and I'm sure it's due to China wanting to place itself in the Middle East. Host governments have a range of objectives. I'm not going to go through more here, but different ones will have different objectives. We need the money, we need the skills. We want to annoy the Americans, think Venezuela. We're a pariah state. No one else is going to come, think Iran or Sudan. So there's a range of host government policies that says we want the Chinese. And again, the host national oil company may also have, you know, we don't have any money. We want to work with some who's got money and skills. And access to opportunities in China. We've got Saudi Aramco and we've got the Kuwaitis now building refineries in China to sell their oil into China. And I think the interesting thing is for how long will these objectives converge in different countries and we're already seeing Chinese oil companies starting to have problems in different countries around the world, not least Nigeria. So, as soon as a question is, you know, what does all this mean for global oil and gas supply? The Chinese are locking up all the oil and gas. Well, no, they're not. They're producing stuff, selling it on the market or even if they send it home. If they are investing, that's good. There's more oil and gas unless you're breathing. They will see that's bad. If you're looking at the oil and gas markets, it's good. They're producing stuff. They have lots of money. They're throwing it into new production. What does it mean for the large international oil companies where BP and Shell are suddenly finding they're going to bed with new players? If you go to Iraq or Angola, then BP and Shell and Total are partnering with the major Chinese oil companies. I think some of the smaller international oil companies or medium-sized ones and some of the NOCs from other oil-importing countries, India, Japan, Malaysia and Korea, they are finding it's very tough competing against the Chinese. They just don't have the bottomless pit of money that comes from the Chinese state banks. The NOCs from oil exporting countries are often very happy to work with Chinese for their skills, technology, for their money and for the opportunity to integrate into the Chinese market. What does it mean for regional security in the Gulf and Southeast Asia? It means that China's interest in this region is just getting bigger and bigger. So you want to talk about Southeast Asia, you want to talk about the Middle East, you cannot leave the Chinese out of these conversations. Relations with states in Africa, from the Soviet Union to Latin America, I mean diplomacy, resource investment, other economic activities basically mean that wherever you go in the world, China is there and the oil industry and the minerals industry and other resources are probably there in a big way. So that's the end of that story. I'm happy to take questions on that or on the unspoken story of China and climate change and internal energy governance. Thank you very much.