Energy firm and automaker unite to face oil prices surge

Shanghai, May 30 (Gasgoo.com) China's auto industry and energy industry recently have coordinated to solve oil supply problems. On May 7, Dongfeng Nissan signed a strategic cooperation agreement with China Petroleum & Chemical Corp (Sinopec), Asia's top refiner. The two sides aim to cooperate in the technology, brand, product, service and overseas market exploration.

In 2003, the global oil was just priced $32 a barrel. However, several years later, the oil prices hit $60,$80, $100 and even flirt with $120 a barrel. The growth of the international crude oil supplies is slowing down, but the demands of developing countries for oil are still rising, the oil prices will continue to increase and the price in the international oil market will hit between $150 and $200 in the next two years, said Arjun Murti, analyst of Goldman Sachs.

As oil prices soar to record levels, the number of vehicles in China is rising too. China has become the second largest automobile market after the U.S., with vehicle sales surpassing 9 million units last year. Experts expect this figure will be rising continually. Therefore, the rising vehicle sales boost the demands for gasoline / petrol, which will contribute to pushing oil prices ever higher.

Facing short supply of oil, automakers are making efforts to deal with oil consumption, some by upgrading the engine technology to reduce its oil consumption, some by developing new-energy vehicles such as hybrid cars, and others by extending the diesel engine technology.

The deal between Dongfeng Nissan and Sinopec is the first in-depth strategic cooperation between an auto company and an energy company in China to deal with the current oil prices surge.