China and Oil
The Post provides a nice analysis of China’s current needs for oil and its future needs, which will determine in large part how long China survives as a nation.
Washington Post
Zhenhai is at the heart of a global energy revolution. As China’s leading oil receiving center, the city provides this nation of 1.3 billion people with hundreds of thousands of barrels of crude per day to feed its galloping economy.
The shifting pattern of energy consumption is rattling Washington and aggravating an already intense rivalry with neighboring Japan over access to oil and gas supplies, adding to tensions in an already volatile region.
“The global demand for oil has been rising faster than supply because there’s new economies that are beginning to gin up, new economies growing, like China and India,” President Bush said recently. “Oil _ the dependence upon oil is a national security problem, and an economic security problem,” Bush said.
China is acutely aware of the security implications of its growing dependence on imported oil. For more than a decade, its three large state-owned companies have been scouring the globe, from Iran to Angola, to secure supplies. In the past six months alone, China has signed deals totaling more than $7 billion for stakes in oil and gas fields in Kazakhstan, Nigeria and Syria. A state-controlled company is reportedly considering a $2 billion bid for yet another Kazakh property.
The worldwide buying spree helped net at least 3.5 million barrels per day of imported oil last year _ enough to make China the world’s third-leading consumer of foreign oil. Chinese demand is forecast to more than double by 2025, to 14.2 million barrels a day from the current 7 million a day, according to the U.S. government’s Energy Information Agency. [snip]
China relies most heavily on the Middle East, which provides about 45 percent of its total oil imports, with Saudi Arabia accounting for about 17 percent.
In late April, Chinese President Hu Jintao flew to the kingdom for talks with Saudi Aramco, the world’s largest oil producer _ the latest episode in a continuing Chinese effort to ensure access to Saudi Arabia’s 9.5 million barrels per day of oil production. That visit, coming just after meetings between Hu and Bush in the United States, was closely monitored in Washington.
China takes American concerns seriously and has worries of its own over its vulnerability to upheavals in global hotspots and to U.S. naval pressure in the Malacca Straits, the narrow Southeast Asian passage through which virtually all Middle Eastern and African oil moves on its way to East Asia.
Though Beijing is building up its own navy, analysts say it would take decades _ if ever _ to match America’s. With the naval option of limited value, China has tried to do the next best thing _ reduce the amount of oil that reaches it via the Straits.
“Gaining access to new routes is a very important strategy for China to ensure the security of its oil imports, aside from diversifying the countries supplying oil,” said Dong, the Chinese Petroleum University professor.
China is studying alternative routes for African and Middle Eastern oil, including a pipeline through Myanmar, a port project in Pakistan and possibly even building a shipping channel through Thailand.
It is also laying pipelines to former Soviet countries. China recently opened a 625-mile link carrying 190,000 barrels a day of Kazakh oil, providing its first direct access to potentially rich central Asian fields.
Construction has begun on an even bigger pipeline project that when completed in 2010 will move up to 1.6 million barrels per day of crude from Russia’s Irkutsk region to its Pacific coast, with a branch line running into northeastern China. Japan prevailed in persuading Moscow to route the main pipeline to the Pacific, rather than into China, providing low-interest loans to pay much of the more than $10 billion cost.
China and Japan are also facing off over potentially rich gas resources in the East China Sea, with no signs of an early resolution.
A recap of what I’ve been saying for some time. China has potential oil reserves close by, in the seas off its east coast, and just over the border in Russia. All this potential is controlled by, or disputed by other nations. China’s energy needs will push them into these disputes with greater frequency and with far more need to resolve them in China’s favor.
Remember, too, that China’s long term view of its security sees its borders as the island nations off shore. Japapm the Phillipines, Taiwan, and even out as far as Indonesia. Whether China’s economy can support the military and political needs to force this expansion is questionable.
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