China's appetite - and need - for energy is growing so fast that within the next four years the world's most populous country will also become world's biggest importer of crude oil, according to a report.

China is expected to spend $500 billion on crude oil imports by 2020, according to the report by consultancy group Wood Mackenzie. That expenditure eclipses the most the US has ever spent - $335 billion - on crude imports.

"The Chinese appetite for energy is growing a lot quicker than many people had assumed," said John Licata, founder and chief energy strategist of Blue Phoenix Inc, a New York-based independent energy-research company. "Despite any slowdown in the economy, there still has been a rampant interest [in China] in securing assets related to energy from around the world."

Now China relies heavily on crude imports from the Middle East and the Organization of the Petroleum Exporting Countries (OPEC). The report that was released on Tuesday estimates China's net oil imports will rise to 9.2 million bpd by 2020 from 2.5 million barrels per day (bpd) in 2005.

While China will be importing more crude oil, net oil imports for the US are expected to fall from a peak of 10.1 million bpd to 6.8 million bpd. Its crude-oil import bill is predicted to fall to about $160 billion by 2020 as the US moves to replace imports from the Middle East and Africa with more domestic oil production from shale resources.

OPEC suppliers, who traditionally focus on the US for crude sales, will shift to China, according to William Durbin, Wood Mackenzie's Beijing-based president of global markets. OPEC's share of Chinese oil imports is expected to rise to 66 percent from 52 percent between 2005 and 2020.

"At a time when we're competing for energy assets, we still have to keep in mind that we have a vision for a lower reliance on carbon-based fossil fuels," Licata said about energy trends in the US. "As China ramps up its own interest, it should only amplify the concern or the intent that the US should diversify away from crude oil."

A loophole in US law has allowed China to import nearly $500 million of additional oil products from Iran this year while avoiding US sanctions, according to a report on Wednesday on the Wall Street Journal's website.

US sanctions penalize any country that imports Iranian oil, but the US has repeatedly given exemptions to China, provided Beijing limits its crude oil imports from Iran.

In the first seven months of this year, China imported 5.4 million barrels of Iranian fuel oil valued at $495 million, according to Chinese customs data.

"The Chinese government certainly knows that, as the population advances, they have to keep the lights on," Licata said. "So, there really is an all-hands-on- deck approach to energy sources, whether it's provided by coal, modern nuclear, crude oil or natural gas."

China is also trying to expand its domestic oil supply, according to Wang Zhen, deputy head of the China University of Petroleum. Wang had previously predicted China would become the world's largest crude importer by 2014, but explained that the country's economic slowdown this year affected oil imports.

"The real test is to find the sustainable resource system to move forward and to try to advance energy without the need for water," said Licata. "That's something that is going to be a global problem."

It takes millions of gallons of water to frack a well for oil or natural gas, and it takes hundreds of thousands of gallons of water to cool down power plants, according to Licata.

"Water is a really precious commodity," Licata said. "China and the US should be doing everything possible to look at embracing the future technologies that will allow us to move forward with energy without reliance on water."

This spring, China's Ministry of Water Resources announced the results of a three-year survey of the country's waterways, of which there were 22,909 rivers in 2011. The data marked a decrease of about 28,000 rivers from the government's previous estimates. Moreover, China's longest rivers - the Yangtze and Yellow - have both experienced declining water levels in recent years.

"Everything is on the table for China right now," Licata said. "That water component is a very big component. If more droughts continue or we're challenged with water supply, that's going to affect everybody's outlook on energy, and I don't think this [issue] is getting talked about enough."