China encourages more foreign investment in energy development

China will encourage foreign investment in its energy sector and will continue to improve the environment for such investment, says a white paper published on Wednesday by the Information Office of the State Council.

China will improve external cooperation in the exploration and development of oil and natural gas resources, says the white paper, which is titled "China's Energy Conditions and Policies."

The paper stresses that China protects the legitimate rights and interests of foreign businesses that collaborate in oil exploitation.

The country encourages foreign businesses to participate in cooperative activities in oil exploration and development, such as risk exploration for oil and natural gas, low-permeability oil fields and gas reservoirs and the improvement of recovery rates of old oil fields, says the paper.

Foreign investment is also welcome in the construction and operation of oil and gas pipelines, as well as special oil and gas storage facilities and port berths, it says.

Exploration and development of unconventional energy resources, such as coalbed methane, is also open to foreign investment, it says.

"China allows foreign investors, either alone or in collaboration with Chinese counterparts, to conduct risk exploration on its territory," says the paper.

Foreign interests that invest in exploring and recovering paragenetic and associated minerals and utilizing tailing or exploring mineral resources in China's western regions "are entitled to enjoy the preferential policy of reduction of or exemption from mineral resources compensation fees", the paper says.

Paragenetic minerals are those mixed together in the same deposit, such as copper and gold.

The paper says further efforts are being made to improve management of and services to foreign investment in the exploration and production of mineral resources aside from oil and gas.

The country also encourages foreign investors to invest in and operate energy facilities such as power plants.

The scope of foreign investment will be expanded, the paper says.

In bringing in foreign investment for the development and utilization of energy resources, China focuses on several factors.

These include technology transfer, management experience and skilled staff to further shift the focus from investing in fossil energy resources to renewable resources.

China also wants to shift away from an emphasis on exploration and development to the development of service trade, and from reliance mainly on foreign loans and direct foreign investment to the directly pooling of funds in international capital market, the paper says.