According to the International Energy Agency (IEA) — though Beijing is refuting this — China has already overtaken the United States as the world’s largest energy consumer. In the process it has also dethroned Japan from its coveted No. 2 position in the global economic order.

Beijing is now the largest crude customer for Riyadh too. The daily exports to China from Saudi Aramco is in the vicinity of one million barrels. This is considerably above the Saudi exports to the United States. China’s regional competitors are far behind in many respects.

All this has strategic dimensions — political and economic. China needs energy resources to maintain its forward push. Beijing is relentlessly endeavoring to cut its dependence on imported energy. It is diversifying its resource base slowly and gradually without much fanfare. And this is interesting in more than one way.

Consulting House Wood Mackenzie’s recent study looking at the fundamentals of the China gas industry finds that unconventional gas, particularly shale, will increase significantly to help meet China’s strong gas demand growth in future. Domestic unconventional gas production will account for over a quarter of total gas supply by 2030.

The report says that China will need only half as much more liquefied natural gas from 2020 onward than it will require in the intervening decade. This has huge significance for LNG producers and exporters. More interestingly, the report points out that Beijing may not need additional gas transported by pipeline after 2020. “Beyond 2020 we expect to see significant volumes of indigenous unconventional gas entering the market and meeting much of China’s incremental demand,” the report emphasized.

Chinese coal gasification, coal bed methane and particularly shale gas are expected to supply more than 12 billion cubic feet per day (bcfd) by 2030, cutting the country’s need for new tanker-delivered LNG to 8 million tons a year from 2020, against 16 million tons annually prior to that.

China’s gas demand is forecast to rise from 9 bcfd (93 billion cubic meters) in 2009 to 43 bcfd (444 billion cubic meters) in 2030, a compound annual growth rate of 7.5 percent, with strongest growth pre-2020. This strong demand growth, says Wood Mackenzie, will not purely be driven by gross domestic product (GDP).

Gavin Thompson, China Gas Study Director for Wood Mackenzie explains, “Demand is driven by a combination of factors, including policies to reduce the country’s growing reliance on oil imports. This is important as the gas demand story is about displacing oil products, not coal, in the industrial and residential sectors.”

According to the IEA statistics, in 2009, more than half of China’s total energy came from coal. Oil, the No. 1 energy source in the US accounting for nearly half the total, made up less than a fifth of the Chinese energy total.

China’s appetite for energy is consistent with the rise in its 1.3 billion-strong population and the growth of its manufacturing-based economy, which churns out half the world’s supply of steel and is also a top producer of aluminum, another fuel-hungry industry.

China is the world leader in wind and solar power and the country is also making “major efforts” in nuclear energy. China has invested heavily in hydroelectric dams, wind turbines and nuclear power plants in an attempt to cut rising reliance on imported oil and gas, which its leaders see as a national security risk.

For the first time ever, China has exceeded the US in newly installed wind capacity. As per a US Department of Energy report, China last year added the highest capacity of wind power, surpassing the US in this sector too.

China rose to the first place in annual wind power additions. The US became the world No. 2, as far as new capacity addition was concerned. Cumulatively, however, America remains in the first place, with more than 35,000 megawatts of wind power capacity; China stands at 25,832 MW.

Beijing is also in the midst of a five-year campaign to cut China’s “energy intensity,” the amount of energy consumed for each unit of economic output, by 20 percent from 2005 levels. The government said this month it has reached the 16 percent mark after shutting down outmoded power plants, steel mills and other facilities.

What does all this mean to energy industry? It definitely carried significant impact for the overall global demand-supply balance, with long-term implications for the energy-rich Middle East. Global energy market dynamics are under constant transition in more than one way, indeed.