China’s voracious energy needs have been a source of concern for government officials for years. Ironically, China was a net oil exporter until the early 1990s and became the world's second-largest net importer of crude oil and petroleum products in 2009. In 2010 it became the largest global energy consumer. The country’s oil consumption growth accounted for one-third of the world's oil consumption in 2013 and the U.S. government’s Energy Information Agency projects China will surpass the United States as the largest net oil importer later this year, as the country’s 2012-2013 oil consumption represented 64 percent of projected world oil demand growth.

Accordingly, news of new discoveries of reserves is a source of relief. On 27 February China’s Ministry of Land and Resources stated China discovered 1.08 billion tons of proven crude oil reserves in 2013, the seventh year that discoveries have exceeded 1 billion tons. Ministry of Land and Resources reserves division deputy chief Xu Dachun said, “In the face of a complicated global petroleum setup, only with a stable growth in oil and gas reserves can China effectively enhance its ability to guarantee energy supplies.

The Ministry of Land and Resources noted that of the 2013 crude discovery, 202 million tons were technically recoverable crude. Natural gas deposits also rose sharply, with new proven reserves totaling 616.4 billion cubic meters in 2013, of which 381.9 billion cubic meters were technically recoverable. The Ministry of Land and Resources also reported that in 2013 China’s crude oil output rose 1.4 percent to 210 million tons and natural gas production jumped 9.1 percent to 117.6 billion cubic meters.

Despite this, China still relies on imports for more than half of its petroleum needs.

As of January 2014, China holds 24.4 billion barrels of proven oil reserves, up over

700 million barrels from 2013 and the highest in the Asia-Pacific region. China's total oil and liquids production, the world’s fourth largest, has risen by roughly about 54 percent over the past 20 years, but virtually all of China’s production is consumed by its domestic market. Worse, production growth has not kept pace with demand growth during this period. In 2013 China produced an estimated 4.5 million barrels per day of total oil liquids, of which 93 percent was crude oil, with projections that China's oil production will rise to about 4.6 million bpd by the end of 2014.

As a result, China has embarked on a worldwide quest to purchase energy, seeking supplies from Central Asia to Africa. But China imports oil from politically unstable nations including inflation ravaged Venezuela and Iran, constricted by international sanctions, as well as turbulent Iraq, the Democratic Republic of Congo and South Sudan, which began slowly descending into civil strife last December. More than half of China's investment in the overseas oil sector is currently in countries considered unstable, including Iran, Nigeria, Sudan, South Sudan and Venezuela.

But driving China’s willingness to enter such risky environments are the dry statistics. China’s crude oil imports have increased about 13 percent annually since 1994 prior to the 2008 global economic downturn, then slowly rising to 7 percent in 2012 and 4 percent in 2013, now standing at roughly 6.2 million barrels per day. Reliable energy supplies remain critical to China maintaining its breakneck pace of economic development, as it is currently the world's fastest-growing major economy with annual gross domestic product growth rates averaging 10 percent for the past three decades.

China’s energy investment risk was illustrated by the turbulence emanating from the Arab Spring. When Libya broke out into civil war in Feb. 2011 China had to evacuate more than 35,000 workers and lost $18 billion in investments in the process. When Sudan fractured into two nations, Sudan and South Sudan in 2011, an estimated $20 billion in Chinese investment in Sudan’s energy sector was suddenly put at risk.

The upshot of all this is that China’s future energy policy will be twofold – first, to maximize indigenous oil and natural gas production as far as possible, and second, to continue to invest globally while mitigating risk. The proof of the latter policy is that in the past seven years China has sunk $119 billion into Canadian energy assets, a surge of FDI curiously overlooked in Washington. Last year Chinese-African trade may have reached $200 billion, primarily in energy and raw materials, but expect to see China seek to minimize energy investment risk, which will in turn see it turn from the Third World to the First, beginning with Canada.