China encourages energy cos to shop abroad

BEIJING, March 26 (Reuters) - China will encourage its energy companies to make more forays abroad to ensure the country's energy security, an even more important strategy than exploration at home, a senior energy official said on Thursday.

"Appropriately obtaining global resources is our inevitable choice and legal right...Winning foreign resources is even more important than stepping up domestic production," Liu Qi, deputy head of National Energy Administration, told an industry forum.

He said that his office is helping big Chinese oil firms talk with Papua New Guinea about oil and gas cooperation and has made good progress.

Liu also said China will offer more tax and other policy incentives to oil and gas firms to explore abroad.

He did not elaborate, but state media have said low-interest loans and capital injections could go to oil giants China National Petroleum Corp [CNPET.UL], Sinopec (600028.SS) and CNOOC Ltd (0883.HK) that aim to expand overseas as the global recession lowers the share prices of possible targets.

Last month, CNPC launched a friendly C$443 million offer for Canada's Verenex Energy Inc VNX.TO, which owns a stake in a promising Libyan oil concession, though the offer was blocked by Libya.

China is working with Myanmar to build an over 2,000 kilometre-long gas and oil pipeline running through Ruili and Kunming in Yunnan province, Guizhou province to Chongqing municipality in southwestern China, Liu said, without providing more details.

The line would help China cut out oil cargoes' long detour through the congested Malacca Strait as well as strengthen China's access to rich energy reserves in Myanmar itself.

Liu also said that China will not loosen its grip on energy efficiency and environmental protection despite the financial crisis and slowing economy.

China will speed up the construction of hydropower plants while strictly controlling the expansion of thermal plants.

Liu said that China plans to bring its hydropower capacity to 190 gigawatts (GW) by 2010, from 171 GW at the end of 2008

It also planned to increase wind power capacity by 10 GW a year after 2010. At the end of 2008 wind power capacity was 12 GW, more than double the end-2007 level.

Beijing will close down 13 GW, 10 GW and 8 GW of small coal-fired power plants a year for the upcoming three years respectively, he said.

China has eliminated 34.21 GW of inefficient thermal power plants in the past three years, finishing more than 68 percent of its target set for the five years through 2010.

Liu also said that China will increase the threshold of new coal power construction and consider prohibiting any new coal power plants with capacity of less than 300 megawatts, and the country will also build 50 GW of clean and efficient high tech thermal power plants in the next three years. (Editing by Michael Urquhart)