July 20 (Bloomberg) -- China's oil imports, a driving force behind record crude prices, have ``stabilized'' and may decline within three years on government measures to conserve fuel, the head of the nation's third-biggest energy company said.

Shipments will stay near 130 million metric tons a year, or about 2.6 million barrels a day, before dropping, helping global prices ease in the ``long term,'' Cnooc Ltd. Chairman Fu Chengyu said in a July 18 interview. International Energy Agency projections, in contrast, suggest China's imports will rise to 4.4 million barrels a day in 2009 from 3.3 million this year.

``The policies on energy saving will take three to five years to implement,'' Fu said in Beijing. ``I feel confident that energy imports won't be as much as we thought before.''

Falling orders from the world's fastest-growing major economy, where oil use more than doubled in a decade, would ease pressure on global supplies that pushed prices to a record $78.40 a barrel this month. Achieving the government's targets will involve shutting factories that waste energy, setting efficiency limits for cars and increasing fuel prices to curb use.

``They ought to improve the structure of the economy,'' and curb reliance on energy-intensive industries that consume a lot of oil, said Donovan Huang, senior analyst at credit-rating company Standard & Poor's in Beijing. ``There's a lot they can do.''

Japan, U.S.

China's oil consumption will rise 6.1 percent to 7 million barrels a day this year, of which 3.7 million will come from domestic fields, the Paris-based IEA, an adviser to 26 oil- consuming nations, said July 12 in its Monthly Oil Market Report. By 2009, demand will jump to 8.2 million barrels a day, of which 3.8 million will be locally produced, the IEA said in its Medium-Term Oil Market Report the same day.

China's energy consumption is 8.4 metric tons of oil equivalent per $10,000 of gross domestic product, 3.4 times the global average, 8 times that of Japan and 4 times the figure in the U.S., Huang said.

There's no sign of any slowdown in oil imports yet, as the nation's economy expanded 10.9 percent in the first half of the year. Shipments from overseas suppliers rose 16 percent to 73.3 million tons (2.97 million barrels a day), according to customs figures. China accounted for 28 percent of the increase in global oil demand between 1995 and 2005, figures in BP Plc's 2006 Statistical Review of World Energy show.

Faster Imports?

Chinese oil imports will rise to account for 13 percent of global oil trade in five years, up from 5 percent now, Henrik Madsen, chief executive officer at Norwegian energy and shipbuilding service company Det Norske Veritas, said today.

``If you look at the energy mix in China today it's very much coal, some hydro power, oil and very little natural gas,'' he said in Beijing. Oil consumption will rise because of China's economic growth and as crude replaces coal as fuel in some industries, he said.

China aims to cut the amount of energy used to produce each unit of GDP by 20 percent in five years, and 4 percent this year, Premier Wen Jiabao said in March. The government is seeking to reduce the nation's reliance on oil imports by promoting power sources such as nuclear, solar and hydropower.

Commenting on the oil market, Fu said ``geopolitical issues'' in regions such as the Middle East may boost prices beyond recent records. Asked whether oil could reach $100, Fu said, ``Maybe.''

$40 A Barrel

Prices beyond $100 aren't warranted ``just on demand and supply,'' as there haven't been any shortages, he said. The ``consensus'' on the long-term price is ``maybe $50 to $60, or even lower.''

Cnooc's investments in oil fields are based on the assumption that prices will be ``no more than $40'' for the ``long term,'' said Fu. Crude for August delivery was at $72.70 a barrel, up 4 cents, in after-hours electronic trading on the New York Mercantile Exchange at 4:38 p.m. in Beijing. Prices today are 29 percent higher than a year ago.

Last year, China's oil imports rose to a record 126.8 million tons, according to the Beijing-based Customs General Administration of China. The cost of oil shipments soared 54 percent to $33 billion in the first half.

``We expect China to import 10 to 15 percent more crude this year,'' Barry Cheung, chief executive of Titan Petrochemicals Group Ltd., the nation's largest oil super-tanker owner, said in Hong Kong in April. ``We believe 2006 will be a better year than 2005.''

`Won't Meet Targets'

China won't meet its energy-efficiency targets this year as local officials continue to pursue economic growth without regard for efficiency, a researcher for the country's top planning body said, the China Daily reported today.

Local government officials make it ``impossible'' for the country to meet efficiency goals because they prioritize GDP growth over conservation, said Yu Cong, director of the Energy Efficiency Center of the National Development and Reform Commission, the state-controlled newspaper said.

Beijing late last year implemented so-called Euro III standards, adopted in Europe in 1999, to regulate emissions of pollutants by automobiles, part of the city government's efforts to improve air quality before the 2008 Summer Olympic Games. The government plans to introduce Euro III standards countrywide next year, according to the State Environmental Protection Administration.

IEA Forecasts

``It looks a bit difficult for them to realize the 4 percent target this year,'' S&P's Huang said.

The drive to improve energy efficiency comes partly from pressure on China to cut emissions of harmful gases linked to climate change. China, the world's largest polluter behind the U.S., produced 33 percent more emissions between 1992 and 2002, the World Bank said in the 2006 edition of its so-called Little Green Data Book. Global emissions rose 15 percent in the same period.

The Bank and a United Nations-run body provided China $127 million in funds in June last year to finance renewable energy programs. Last month, Beijing put into use the first three hydrogen fuel-cell buses that produce zero emissions of air pollutants. It may take 15 years before the buses become a common sight in the capital, Tang Miao, chief engineer at Beijing Public Transport Co. said June 20.

To contact the reporter on this story: Damien Ryan in Hong Kong at dryan3@bloomberg.net; Ying Lou in Hong Kong at ylou1@bloomberg.net

Last Updated: July 20, 2006 04:49 EDT