President of China National Offshore Oil Corporation (CNOOC) Fu Chengyu said in Hainan Saturday that China needs to incorporate natural gas expansion into the fundamentals of energy strategy in order to alleviate environmental pressure, relieve energy security concerns and improve energy efficiency.

At one sideline of the Boao Forum for Asia 2005 annual conference, Fu estimated that China will consume 64.3 billion cubic meters of liquefied natural gas (LNG) in 2005 with 63 billion cubic meters churned out by domestic manufacturers.

However, China's consumption of LNG will reach up to 250.7 billion cubic meters in 2020 while the home production capacity ofLNG increases to 108.6 billion cubic meters, according to Fu's estimation.

In primary energy consumption mix of China in 2003, statistics showed, coal accounted for 68 percent, oil 23 percent, hydropower 5 percent, natural gas 3 percent and nuclear power 1 percent. In the world average statistics meanwhile, oil took up 38 percent, coal 26 percent, natural gas 24 percent and hydropower and nuclearpower both 6 percent.

The dynamics of natural gas price competitiveness in China's energy market has been transformed by liberalization in coal sector and deregulation in power sector, Fu said.

Australia is going to be a big potential energy supplier to fuel the high growth momentum of China's economy, Fu said, adding that more works need to be done by the Australian government to promote Sino-Australian energy cooperation to a higher level.

He suggested the two governments speed up free trade agreement negotiation to achieve substantial progress.

More preferable terms should be adopted for foreign companies which invest in the upstream of resources industry including energy and other minerals, he said.

Garry Draffin, chief executive officer of the Australian InwardInvestment Agency, said his country is interested in cooperating with China in resources exploration as well as energy industry. Australia will export more natural gas to Asian countries including China, he said.

Source: Xinhua