The earliest known oil wells were drilled in China in 347 CE or earlier. They had depths of up to about 800 feet (244 m) and were drilled using bits attached to bamboo poles. The oil was burned to evaporate brine and produce salt. By the 10th century, extensive bamboo pipelines connected oil wells with salt springs. The ancient records of China are said to contain many allusions to the use of natural gas for lighting and heating.
Today, about 90% of vehicular fuel needs are met by oil. Petroleum also makes up 40% of total energy consumption in the United States, but is responsible for only 2% of electricity generation. Petroleum's worth as a portable, dense energy source powering the vast majority of vehicles and as the base of many industrial chemicals makes it one of the world's most important commodities.
Along with its rapid economic growth, China has become the world's second largest consumer of petroleum, consuming 1,016,088 cubic meters per day, according to CIA World Factbook. The country's crude oil imports reached 140 million tons in 2006, up 10.2 percent on 2005, according to the Ministry of Commerce (MOC). Liang Shuhe, deputy director with the Foreign Trade Department of MOC, said that China will depend even more on imports because of the limited domestic production.
The Chinese government removed tariffs on oil imports in November 2006 and opened its domestic oil market to foreign companies in December to cut the cost of oil imports. China's wholesale market for crude oil and refined oil products was opened to foreign investment in 2007, under new regulations issued by the MOC. Before Dec. 11, the wholesale market of crude oil was controlled by the government while China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec Corp.), China's two biggest oil firms, monopolized the wholesale refined oil market. Analysts predict that the liberalization of the wholesale market will further fuel up the country¡¦s crude oil imports.
Gulf Kingdom Petroleum (Hong Kong) Co. Ltd (GKP) has partnered with a number of crude oil sources in the Middle East to provide China with high quality petroleum. Until now the company has signed agreements with a significant number of Chinese buyers which are demanding not less than 200,000 metric tones per month. We expect that the first shipment will be made by the end of this year.