http://www.fiw.ac.at/fileadmin/Documents/Publikationen/Studien_II/SI03.Studie.China__s_oil.pdf
FIW Research Reports 2009/10 N° 03
January 2010
China’s foreign oil policy: genesis,
deployment and selected effects
Edward Hunter Christie (Ed.), Joseph Francois, Waltraut Urban, Franz Wirl
This is a long article, but I chose to comment on the piece on Diversification, risks and threats and China’s oil security targets
According to Winston Churchill ‘the key to oil supply security is with diversity and diversity alone.’According to the article their are three types of diversity that are relevant for energy security: diversity of suppliers, diversity of routes, and diversity of fuels. In regards to diversity of suppliers and fuels the article actually talks about how it is better to have one reliable supply rather than several shaky supplies which would reduce overall risk. In regards to diversity of routes, it is important to do a risk analysis factoring in cost and benefits to creating new routes in relation to the risk associated with existing routes.
China has undergone a major campaign towards securitization of its oil resources. China can securitize it's oil in two ways, either confrontationally or non. Since much of China's oil is exported by sea mainly through the Straits of Malacca, one way that it can securitize it's shipments non-confrontationally is by finding alternative ways to import its oil such as pipelines or third parties. Potential threats to China's shipping of oil by sea include largescale terrorist attacks, piracy, naval blockades, major shipping accidents and/or extreme weather events. The Straits of Malacca is such an important location for China because it would be a pivotal blocking point of oil exports if say they were to get into conflict with the United States. If the United States wanted to cut off China's oil the Straits is where it would most likely occur. Since the Iraq war China has decided to focus more on issues of oil security. "ong Lixia, an energy expert at the Chinese Academy of International Trade and Economic Cooperation stated: ‘The turning point in China's energy strategy was the Iraq war. After 2003, both the companies and the government realized China could not rely on one or two oil production areas. It's too risky."
Issues such as diversification and Securitization of oil are pressing and will dictate the future of China and its growth.
Wednesday, April 27, 2011
Tuesday, April 26, 2011
A little bit of realpolitik
Article: Robert S. Ross, "China's Naval Nationalism: Sources, Prospects, and the U.S. Response", International Security, Fall 2009.
This is a classic mainstream text holding the worldview of a global race for geopolitical supremacy between the U.S. and China. It reminded me a lot of the vast majority of articles contained in the FP magazine that we can pick up every week at GPIA office :)
The author proposes a thesis whereby the chief point of concern is China's alleged spiking military build-up, especially in the area of naval security. He identifies that as a growing concern for the U.S. national security and its position as a power hegemon in Pacific blue-waters.
Ross claims that in light of China's alleged desire to attain a great power status similar to the U.S., its leadership has decided to invest heavily into the nation's naval forces. This, in turn, might pose some threat to the established security interests of the U.S. (which are portrayed as vital not only in terms of the U.S. national security, but also from the viewpoint of providing security to U.S. main partners in the region, such as Japan or Singapore). In this regard, China is depicted as an unwelcome challenge.
According to Ross, this thrust for the attainment of greatness is further complemented by China's "pseudo-national interest strategy". Indeed, this is the main thread throughout the whole article as the Chinese leadership, however rational and relatively non-aggresive in terms of geopolitical agenda, has been ostensibly captured by China's nationalists who seek increased militarization to fulfill aspirations of the Chinese people.
In Ross' view, this kind of nationalism is wholly irrational and undermines China's long-lasting strategy of power projection via peaceful diplomatic means. This approach has, for decades, helped China attain its current economic growth and, at the same time, left unchallenged the U.S. naval supremacy in the Pacific. Since the author clearly associates himself with the view that, in order for world's peace and stability, we need the U.S. to singularly take on the protection of blue-seas and maintain its status as a chief guarantor of international security, he obviously dismisses this avowed Chinese nationalism. But by supposedly acknowledging its dominant position within the society (a point I found lacking credible evidence), Ross makes several alarming points with possible consequences for the U.S. should this whole nationalistic wave let loose.
However, he concludes by appeasing everybody that China is still lagging far behind the U.S.'s naval capabilities. According to him, some of the most crucial short-term implications are possible distortions in the U.S.-China diplomatic relations which, as he stresses, should desirably be kept friendly. Chinese nationalists should regain their sanity, strip their overly ambitious plans and stop investing heavily into navy.
By and large, this is an interesting piece. Not for the originality of argument, but rather for the chance to see the lines along which U.S. mainstream analysts write. There is a critical rejoinder to this published in the same magazine few months later. I will read it soon and then provide a summary. In this way, we can set ourselves a stage for a sound analytical framework.
This is a classic mainstream text holding the worldview of a global race for geopolitical supremacy between the U.S. and China. It reminded me a lot of the vast majority of articles contained in the FP magazine that we can pick up every week at GPIA office :)
The author proposes a thesis whereby the chief point of concern is China's alleged spiking military build-up, especially in the area of naval security. He identifies that as a growing concern for the U.S. national security and its position as a power hegemon in Pacific blue-waters.
Ross claims that in light of China's alleged desire to attain a great power status similar to the U.S., its leadership has decided to invest heavily into the nation's naval forces. This, in turn, might pose some threat to the established security interests of the U.S. (which are portrayed as vital not only in terms of the U.S. national security, but also from the viewpoint of providing security to U.S. main partners in the region, such as Japan or Singapore). In this regard, China is depicted as an unwelcome challenge.
According to Ross, this thrust for the attainment of greatness is further complemented by China's "pseudo-national interest strategy". Indeed, this is the main thread throughout the whole article as the Chinese leadership, however rational and relatively non-aggresive in terms of geopolitical agenda, has been ostensibly captured by China's nationalists who seek increased militarization to fulfill aspirations of the Chinese people.
In Ross' view, this kind of nationalism is wholly irrational and undermines China's long-lasting strategy of power projection via peaceful diplomatic means. This approach has, for decades, helped China attain its current economic growth and, at the same time, left unchallenged the U.S. naval supremacy in the Pacific. Since the author clearly associates himself with the view that, in order for world's peace and stability, we need the U.S. to singularly take on the protection of blue-seas and maintain its status as a chief guarantor of international security, he obviously dismisses this avowed Chinese nationalism. But by supposedly acknowledging its dominant position within the society (a point I found lacking credible evidence), Ross makes several alarming points with possible consequences for the U.S. should this whole nationalistic wave let loose.
However, he concludes by appeasing everybody that China is still lagging far behind the U.S.'s naval capabilities. According to him, some of the most crucial short-term implications are possible distortions in the U.S.-China diplomatic relations which, as he stresses, should desirably be kept friendly. Chinese nationalists should regain their sanity, strip their overly ambitious plans and stop investing heavily into navy.
By and large, this is an interesting piece. Not for the originality of argument, but rather for the chance to see the lines along which U.S. mainstream analysts write. There is a critical rejoinder to this published in the same magazine few months later. I will read it soon and then provide a summary. In this way, we can set ourselves a stage for a sound analytical framework.
'No-Strings' Attached
In a piece by Paul French and Sam Chambers, entitled "Oil on Water", the two authors reveal interesting info about China's oil hungry no strings investment in the emerging African oil industry.
As we know, the Chinese government has been very liberal in offering credit and aid on generous terms to oil-producing African nations. China now sources 25-30 percent of its oil imports from Africa, and in 2009, China took 30 % of Angola's total oil exports and 60% of Sudan's output.
China has courted over US$20 billion of aid to African oil nations, and Angola briefly overtook Saudi Arabia as China's major oil supplier. China's oil refining industry is mostly geared to handle sweet crude, which favors African oil over Saudi Arabian's mixture of sweet and crude.
Critics claim that China has unfairly used diplomatic leverage, ignored corruption and conflicts, and done nothing to encourage transparency in the industry, and done little to create jobs in the countries with which it invests. Beijing counters that Americans take more oil from Africa than China does, and through imperialism and business.
As we know, the Chinese government has been very liberal in offering credit and aid on generous terms to oil-producing African nations. China now sources 25-30 percent of its oil imports from Africa, and in 2009, China took 30 % of Angola's total oil exports and 60% of Sudan's output.
China has courted over US$20 billion of aid to African oil nations, and Angola briefly overtook Saudi Arabia as China's major oil supplier. China's oil refining industry is mostly geared to handle sweet crude, which favors African oil over Saudi Arabian's mixture of sweet and crude.
Critics claim that China has unfairly used diplomatic leverage, ignored corruption and conflicts, and done nothing to encourage transparency in the industry, and done little to create jobs in the countries with which it invests. Beijing counters that Americans take more oil from Africa than China does, and through imperialism and business.
Friday, April 22, 2011
Oil Wars: China's Influence on the U.S. Economy pt. 1 of 5
Check out this youtube video on China, it's great
http://www.youtube.com/watch?v=cNnsyuLQ08g&feature=related
http://www.youtube.com/watch?v=cNnsyuLQ08g&feature=related
Wednesday, April 20, 2011
Summary of Feeding the dragon: the relentless drive by Chinese energy companies to buy ovrseas oil and gas assets is likely to be constrained by forei
http://find.galegroup.com/gtx/infomark.do?&contentSet=IAC-Documents&type=retrieve&tabID=T003&prodId=ITOF&docId=A140095722&source=gale&srcprod=ITOF&userGroupName=nysl_me_newsch&version=1.0
Feeding the dragon: the relentless drive by Chinese energy companies to buy ovrseas oil and gas assets is likely to be constrained by foreign politics.(China).
Petroleum Economist 72.12 (Dec 2005): p10(2). (1302 words)
In lou of China's go-abroad policy, the country has began to lax many of it's policies such as "loosening its control over the mergers and acquisitions (M&A)" which will help China to procure oil more easily abroad. According to the article the rush overseas "is part of a wider, explicit government strategy". Deals were signed in Australia, Myanmar and Indonesia; and Sinochem by China's National Offshore Oil Corporation (CNOOC). According to the article "the crowning glory was CNPC's successful $4.4bn acquisition of PetroKazakhstan, which gives the Chinese firm proved and probable reserves of 0.55bn barrels of oil equivalent at roughly $7.60 a barrel and, importantly, the chance to pump oil from fields direct to China through an under-construction 1,000 km pipeline." In 2004 the company "singed 48 contracts with 20 countries" and "over the next 15 years plans to spend a total of $18bn on oversees acquisitions and stakes. One key advantage to China's go-abroad policy is the fact that China does not adhere to restrictions set by other countries namely the United States and what countries it can do business with. As a result China has a history of making deals with corrupt regimes such as Uzbekistan, Myanmar and Sudan. For China the bottom line is business.Su
Feeding the dragon: the relentless drive by Chinese energy companies to buy ovrseas oil and gas assets is likely to be constrained by foreign politics.(China).
Petroleum Economist 72.12 (Dec 2005): p10(2). (1302 words)
In lou of China's go-abroad policy, the country has began to lax many of it's policies such as "loosening its control over the mergers and acquisitions (M&A)" which will help China to procure oil more easily abroad. According to the article the rush overseas "is part of a wider, explicit government strategy". Deals were signed in Australia, Myanmar and Indonesia; and Sinochem by China's National Offshore Oil Corporation (CNOOC). According to the article "the crowning glory was CNPC's successful $4.4bn acquisition of PetroKazakhstan, which gives the Chinese firm proved and probable reserves of 0.55bn barrels of oil equivalent at roughly $7.60 a barrel and, importantly, the chance to pump oil from fields direct to China through an under-construction 1,000 km pipeline." In 2004 the company "singed 48 contracts with 20 countries" and "over the next 15 years plans to spend a total of $18bn on oversees acquisitions and stakes. One key advantage to China's go-abroad policy is the fact that China does not adhere to restrictions set by other countries namely the United States and what countries it can do business with. As a result China has a history of making deals with corrupt regimes such as Uzbekistan, Myanmar and Sudan. For China the bottom line is business.Su
China's "Peaceful Oil Diplomacy"
Article: Hongyi Harry Lai, "China's Oil Diplomacy: Is It a Global Security Threat?" Third World Quarterly 28.3 (2007)
This article examines China's expansion into the Middle East in terms of increasing oil imports, and whether or not this represents a threat the U.S. national security by virtue of tapping into the U.S.'s source of energy resources.
The author argues that these fears have been largely exaggerated. He supports this by mentioning China's support for the U.S. actions vis-a-vis Iraq (voted in favor of UN SC Res. 1441/2002) or the still limited capacity of China's maritime forces whose main preoccupation remains covering of the Taiwan Strait in South China Sea. The Chinese ability to control the oil sea lanes to/from the Persian Gulf is thus very limited. With this in mind, China depends on help from other countries, including the U.S.
Also, in light of the fact that the U.S. oil imports from Arab OPEC nations only accounted for 14.8% in 2005 (I will have to check the latest data on this), the proposed challenge to the U.S. national security does not seem like an urgent matter.
Lastly, China's "peaceful oil diplomacy" has been underlined by the fact that, in 2004, China's domestic energy consumption was still largely based on coal (67.7%); oil accounted for 22.7%. As the study argues, thus, "imported oil plays only a minor role in China's energy consumption". With regards to oil imports from Iran, to mention some of the growing worries amongst the Americans who perceive China's friendly ties with Iran as a reason for caution, the Middle Eastern country supplied only 1% of China's total energy consumption in 2003. On top of all that, it is argued that China has been aware of the growing concerns pertaining to its rapid global expansion and growing energy needs and, thus, so far restrained from any actions that might threaten mutual relations with the U.S.
With this in mind, my personal comment would be that China's speedy development and a heightened thirst for oil are likely going to be based increasingly on oil as a vehicle for growth and urbanization. Hence, with oil expected to be gradually replacing coal in its importance as a core resource, one might expect that China could place more emphasis on securing oil imports from the Middle East in the future. This, in turn, could potentially re-shape the hitherto maintained balance of power and regional/global security framework.
This article examines China's expansion into the Middle East in terms of increasing oil imports, and whether or not this represents a threat the U.S. national security by virtue of tapping into the U.S.'s source of energy resources.
The author argues that these fears have been largely exaggerated. He supports this by mentioning China's support for the U.S. actions vis-a-vis Iraq (voted in favor of UN SC Res. 1441/2002) or the still limited capacity of China's maritime forces whose main preoccupation remains covering of the Taiwan Strait in South China Sea. The Chinese ability to control the oil sea lanes to/from the Persian Gulf is thus very limited. With this in mind, China depends on help from other countries, including the U.S.
Also, in light of the fact that the U.S. oil imports from Arab OPEC nations only accounted for 14.8% in 2005 (I will have to check the latest data on this), the proposed challenge to the U.S. national security does not seem like an urgent matter.
Lastly, China's "peaceful oil diplomacy" has been underlined by the fact that, in 2004, China's domestic energy consumption was still largely based on coal (67.7%); oil accounted for 22.7%. As the study argues, thus, "imported oil plays only a minor role in China's energy consumption". With regards to oil imports from Iran, to mention some of the growing worries amongst the Americans who perceive China's friendly ties with Iran as a reason for caution, the Middle Eastern country supplied only 1% of China's total energy consumption in 2003. On top of all that, it is argued that China has been aware of the growing concerns pertaining to its rapid global expansion and growing energy needs and, thus, so far restrained from any actions that might threaten mutual relations with the U.S.
With this in mind, my personal comment would be that China's speedy development and a heightened thirst for oil are likely going to be based increasingly on oil as a vehicle for growth and urbanization. Hence, with oil expected to be gradually replacing coal in its importance as a core resource, one might expect that China could place more emphasis on securing oil imports from the Middle East in the future. This, in turn, could potentially re-shape the hitherto maintained balance of power and regional/global security framework.
Monday, April 18, 2011
Concrete Project Outline?
I think we really need to come up with some tangible plan or ideas of how to proceed with this project.
(1) What will be the topic of the project? It does not suffice to limit our analysis to where China gets its oil from or what its future energy requirements will be.
- we should choose a specific aspect of this very broad topic so that we can better focus our research. Personally, I think there are two good ways we can approach it:
(a) Focus on China's oil policies towards a specific region (Africa, Middle East) and how this changes hitherto maintained balance of power there. Alternatively, what are the positive (greater development aid for the region..etc.) and negative (environmental degradation, propping up undemocratic governments..etc.) implications of China's growing involvement in that particular region.
(b) China's "oil expansion" into the Middle East and its potential consequences in terms of contending security concerns of other major powers there (the U.S. in particular). Can China's growing share on the Middle Eastern oil markets precipitate conflict? Is China speeding up the expansion of its maritime forces in order to better safeguard its oil imports (and, thereby, challenging the post-WWII U.S. hegemony in this area)?
- Let's talk about this. If anyone has a different view on how we should proceed, we can debate it.
(2) What is the outline and who's going to work on which part?
- obviously, without resolving the first point, there is no way of coming up with an outline. However, based on the blog posts made so far and our general interests, I propose the following:
TOPIC: CHINA OIL AFFAIRS: THE SHIFTING BALANCE OF POWER IN THE MIDDLE EAST AND NORTH AFRICA
I. Introduction
II. China's Booming Economy: Past Precedents and Future Needs
(a) The Flawed Policy of Self-Reliance
(b) China's Economy Today: Growing Oil Demands, World Markets and Increased Foreign Involvement
III. The Security Framework in the Middle East
(a) The U.S. as a Traditional Provider of Security in the Middle East
(b) China's Increasing Share on the Persian Gulf Oil Market - A Threat to the U.S. Interests and Regional Security?
IV. The Security Framework in North Africa
(a) The Oil Markets in Sudan, Libya and Other Oil-Exporting Countries in the Region
(b) The Role of China: Oil Interests and the Changing Security Situation
V. Is China's Involvement in the Middle East and North Africa a Reason for Concern?
(a) How Is China's Economic Outreach Tied to a Greater Militarization of the Region? Or, Is It?
(b) U.S. Take on China's Increasingly Felt Presence in the Region
- in this paragraph, we could analyze countries like S. Arabia, Kuwait or Bahrain and whether their reliance on the U.S. as a long-lasting security provider comes at odds with China's increasing role as a top client.
V. Conclusion
Please, let me know what do you think. Over the next few days, I am going to read couple of articles on this topic.
Jakub
(1) What will be the topic of the project? It does not suffice to limit our analysis to where China gets its oil from or what its future energy requirements will be.
- we should choose a specific aspect of this very broad topic so that we can better focus our research. Personally, I think there are two good ways we can approach it:
(a) Focus on China's oil policies towards a specific region (Africa, Middle East) and how this changes hitherto maintained balance of power there. Alternatively, what are the positive (greater development aid for the region..etc.) and negative (environmental degradation, propping up undemocratic governments..etc.) implications of China's growing involvement in that particular region.
(b) China's "oil expansion" into the Middle East and its potential consequences in terms of contending security concerns of other major powers there (the U.S. in particular). Can China's growing share on the Middle Eastern oil markets precipitate conflict? Is China speeding up the expansion of its maritime forces in order to better safeguard its oil imports (and, thereby, challenging the post-WWII U.S. hegemony in this area)?
- Let's talk about this. If anyone has a different view on how we should proceed, we can debate it.
(2) What is the outline and who's going to work on which part?
- obviously, without resolving the first point, there is no way of coming up with an outline. However, based on the blog posts made so far and our general interests, I propose the following:
TOPIC: CHINA OIL AFFAIRS: THE SHIFTING BALANCE OF POWER IN THE MIDDLE EAST AND NORTH AFRICA
I. Introduction
II. China's Booming Economy: Past Precedents and Future Needs
(a) The Flawed Policy of Self-Reliance
(b) China's Economy Today: Growing Oil Demands, World Markets and Increased Foreign Involvement
III. The Security Framework in the Middle East
(a) The U.S. as a Traditional Provider of Security in the Middle East
(b) China's Increasing Share on the Persian Gulf Oil Market - A Threat to the U.S. Interests and Regional Security?
IV. The Security Framework in North Africa
(a) The Oil Markets in Sudan, Libya and Other Oil-Exporting Countries in the Region
(b) The Role of China: Oil Interests and the Changing Security Situation
V. Is China's Involvement in the Middle East and North Africa a Reason for Concern?
(a) How Is China's Economic Outreach Tied to a Greater Militarization of the Region? Or, Is It?
(b) U.S. Take on China's Increasingly Felt Presence in the Region
- in this paragraph, we could analyze countries like S. Arabia, Kuwait or Bahrain and whether their reliance on the U.S. as a long-lasting security provider comes at odds with China's increasing role as a top client.
V. Conclusion
Please, let me know what do you think. Over the next few days, I am going to read couple of articles on this topic.
Jakub
Sunday, April 17, 2011
China's Quest for The Next Empire
An article by Howard French in the Atlantic magazine (http://www.theatlantic.com/magazine/archive/2010/05/the-next-empire/8018/) discusses how Chinese companies are signing deals that involve oil production in Africa. Since the turn of the millennium, Chinese companies have muscled in on lucrative oil markets in places like Angola, Nigeria, Algeria, and Sudan.
French claims that to fully grasp China’s economic approach in Africa, one must study European imperial history—as Beijing itself has been doing. "If you look at Chinese policy documents, it is very obvious that they are focused on opening up the heart of the continent. There is clearly a long-term strategy for doing this, and it seeks to break up the north-south flow of minerals, to build east-west lines that will allow them to bypass South Africa.”
French claims that to fully grasp China’s economic approach in Africa, one must study European imperial history—as Beijing itself has been doing. "If you look at Chinese policy documents, it is very obvious that they are focused on opening up the heart of the continent. There is clearly a long-term strategy for doing this, and it seeks to break up the north-south flow of minerals, to build east-west lines that will allow them to bypass South Africa.”
Wednesday, April 13, 2011
China's Angst over Iran Sanctions
Article:To Appear in Middle East Economic Survey (MEES)- Op-Ed http://www.mees.com/cms/
China's Angst over Iran Sanctions
Beijing’s go-it-alone oil security could fail during any U.S.-Iran conflict
Thomas W O'Donnell, PhD
China isn't happy with the fact that the U.S. has "targeted" sanctions on Iran's nuclear program, which have the potential to interrupt oil supplies to China. This poses a problem because 50% of China's oil comes from the Persian Gulf. If China decides to side with the U.S. and sanction Iran it could cut china's supply which amounts to about 500,000 barrels per day.
China is in the process of building two storage facilities that will hold 100 million barrels of oil in anticipation of possible supply loss. The problem with the reserves is that they amount to only about a month's worth of China's imports.
As a fall back China needs to decide if it wants to join the IEA reserve system. This has the potential to undermine China's "Go Abroad" strategy, the idea of this strategy is for China to be completely independent of all other countries, including OPEC and the OECD which would make China subject to the U.s.
China's Angst over Iran Sanctions
Beijing’s go-it-alone oil security could fail during any U.S.-Iran conflict
Thomas W O'Donnell, PhD
China isn't happy with the fact that the U.S. has "targeted" sanctions on Iran's nuclear program, which have the potential to interrupt oil supplies to China. This poses a problem because 50% of China's oil comes from the Persian Gulf. If China decides to side with the U.S. and sanction Iran it could cut china's supply which amounts to about 500,000 barrels per day.
China is in the process of building two storage facilities that will hold 100 million barrels of oil in anticipation of possible supply loss. The problem with the reserves is that they amount to only about a month's worth of China's imports.
As a fall back China needs to decide if it wants to join the IEA reserve system. This has the potential to undermine China's "Go Abroad" strategy, the idea of this strategy is for China to be completely independent of all other countries, including OPEC and the OECD which would make China subject to the U.s.
Tuesday, April 12, 2011
China's Need for Naval Army
Article: Lee Jae-Hyung, "China's Expanding Maritime Ambitions in the Western Pacific and the Indian Ocean", Contemporary Southeast Asia, Vol.24, no.3, Dec 2002.
Though this article is somewhat outdated, it nevertheless sheds light on the basic imperatives for China to strengthen its military base in order to complement economic growth with adequate security.
(1) The article stresses the fact that "Beijing has recognized the importance of sea-lines of communication from the Persian Gulf to China, as it became a net oil importer in 1993"
- hence, there has been an almost existential incentive for China to expand its military capabilities, especially the naval force. With China's exponential economic performance, there is every reason to believe that the simultaneous militarization of international waters will continue.
(2) The South China Sea sea lanes are vital for the Chinese as exercising control over this area speaks directly to safeguarding imports of oil from the Persian gulf.
- it seems imperative for the Chinese to first ensure that the waters closest to the China mainland will be controlled by the Chinese navy. In addition, a heightened presence of China in the South China Sea could enable Beijing to get more leverage over Taiwain, which remains protected by the U.S.
(3) By going further west, China embarked on securing support of major regional players, such as Myanmar and Pakistan, partly to maintain balance of power vis-a-vis India. The two countries share favorable relations with Beijing, the latter acting as a welcome alternative to the perceived regional hegemony of the U.S.
- in this respect, is this a worrying sign for the international community given China's poor democratic and human rights record? Or, is it that neither the U.S. nor China have done anything meaningful to support democracy in the region and, hence, the fact that China is increasingly asserting itself should not be too alarming?
(4) The author also touches upon China's currying favor with Iran. As he asserts, "Iran seeks to enhance its political and military influence over the Middle East and to reduce interference form foreign powers, especially the United States, in the Persian Gulf region."
Furthermore, he stresses that "China anticipates that its close ties with Iran would guarantee its growing requirement for oil from the Middle East, and help to restrain radical Islam in China’s western provinces. Iran is viewed as a potential counterbalance to U.S. influence in the Persian Gulf; and China also views Iran as a market for its military hardware."
- Iran's present-day hostility toward the West in general, and the U.S. in particular, points to a likely continuation of this policy from the Chinese side. But to what extent can the U.S. pressure Beijing to give up on its growing engagement in the region, considering the fact that the U.S. is still straight-jacketed by the lingering economic recession and, on the contrary, China is enjoying a positive balance of trade and a steady growth?
- Overall, the intent of Beijing to gradually build its military base can undoubtedly be detected. By conceiving of itself as a superpower equal to the U.S., this military build-up should also be viewed as an attempt to challenge the U.S. military (and esp. naval) supremacy.
- As a next step, it could be perhaps useful to take a look at China's military involvement in the Middle East and what reactions has it elicited from the side of the U.S.
A Possible Roadmap
Hi,
these are just some of the brief thoughts of mine regarding how we might go ahead with this project.
(1) Based on last week's comments and suggestions by Tom, I think it might be helpful to look more closely at China's policy of 'self-reliance' during Mao (and perhaps even some years later). I believe this could give us a basis for better a understanding of China's current oil policy. By looking at this China's past experience, we could perhaps better evaluate how important it is for the Chinese to establish various new networks on the global oil market. For, on one hand, while it is obvious that China needs an increasing amount of oil to sustain its rapid economic growth, this sole premise itself may not be enough to examine the true importance China places on reaching out to far-flung oil markets. It is possible that by shedding more light on this particular element, we will be better equipped to properly assess China's simultaneous developments in the field of security, and potential challenges to the present U.S. military hegemony, especially in the Middle East.
(2) This brings me to my second major point - how does China's increasing presence in oil-exporting regions translate into the changing balance of powers there. Is there any threat for the U.S. if China keeps on importing steadily increasing amounts of petroleum from hitherto U.S.-dominated markets? And, if yes, what could a likely U.S. response be?
I believe it is certainly not in the U.S. interests to pass on its military control over the most significant oil regions to China. The U.S. is still going through an economic recession, while the Chinese have been enjoying an unprecedented economic growth for the past couple of years. This, however, has been yet to translate into a military leverage, which remains firmly under the grips of the U.S. army.
For me, the major question could be as follows: would the shifting geopolitical balance of powers worldwide, and especially in the Middle East and other oil-rich regions, lead to a conflict between the U.S. and China? If not, what are the indicators supporting it; if yes, can we already see signs of heightened tensions between the two superpowers?
Sunday, April 10, 2011
Sino-African vs. Sino-U.S. Energy Relations
An article accessed at: http://www.globalpolicy.org/component/content/article/198-natural-resources/40248.html states:
China currently derives 25% of its oil imports from Africa, with interests in Algeria, Angola, Chad and Sudan and increasing stakes in Equatorial Guinea, Gabon, and Nigeria.
China's growing energy partnership with Sudan represents one of a number of areas where Sino-U.S. energy interests diverge in Africa. China National Petroleum Corporation established oil exploration rights in Sudan in 1995. Two years later when Washington cut ties with Sudan, China filled the vacuum making Sudan China's largest overseas production base. More than half of Sudan's oil exports go to China, accounting for five percent of China's total oil imports. C.N.P.C. owns a 40 percent stake in the Greater Nile Petroleum Operating Company and pumps over 300,000 barrels per day in Sudan. Another Chinese firm, Sinopec, is constructing a 1500 kilometer (932 miles) pipeline to Port Sudan on the Red Sea, where China's Petroleum Engineering Construction Group is building a tanker terminal.
In recent years China's political, economic and military relations with Africa have been subordinated to its quest to secure energy resources in the African continent as energy resources are being secured in exchange for aid, arms or infrastructure investment. China's relations with Africa have shifted from holding a strong ideological bias in support of communist regimes and Marxist insurgencies to being led by market and resource considerations.African states are drawn to China by its non-ideological, non-interventionist approach, which contrasts with the Western approach that places an emphasis on democracy, governance, human rights and humanitarian intervention.
With Sudan and Iran together supplying China with 20 percent of its oil imports, U.S. attempts to contain these regimes bring it into direct confrontation with China's energy security policies.
The United States and China are not the only states vying for energy resources in Africa. Recently, Korea National Oil Corporation obtained 65 percent oil and gas production rights in two Nigerian offshore blocks, while India's Oil and Natural Gas Corporation Videsh obtained a 25 percent stake. South Korea and India are the world's fourth and sixth largest energy consumers respectively. India and China both hold stakes in the Greater Nile Oil Project in Sudan with India having invested US$700 million in Sudan's oil sector. China and India have also been engaged in direct competition for African energy resources, as seen in October 2004 when China outbid India to buy an interest in an offshore block in Angola. [See: "Economic Brief: China's Energy Acquisitions"]
While there have been gestures of rapprochement in Sino-U.S. relations such as the recently initiated Sino-U.S. Strategic Dialogue and both states along with India, Australia, Japan and South Korea establishing an energy partnership known as the Asia Pacific Partnership on Clean Development, the competition to secure energy resources on the world stage could fuel their already shaky relationship. The recent failed bid by Chinese energy company China National Offshore Oil Corporation to acquire U.S. energy company Unocal is evidence of this. Facing a plethora of internal crises ranging from poverty to poor governance and civil war, Africa is likely to emerge as a volatile stage of Sino-U.S. energy competition. African states have been drawn to China by its non-interventionist, non-ideological approach in conducting relations, although China's attempts to secure energy resources in conflict-ridden states by offering aid or arms-for-oil could heighten instability in the region.
China currently derives 25% of its oil imports from Africa, with interests in Algeria, Angola, Chad and Sudan and increasing stakes in Equatorial Guinea, Gabon, and Nigeria.
China's growing energy partnership with Sudan represents one of a number of areas where Sino-U.S. energy interests diverge in Africa. China National Petroleum Corporation established oil exploration rights in Sudan in 1995. Two years later when Washington cut ties with Sudan, China filled the vacuum making Sudan China's largest overseas production base. More than half of Sudan's oil exports go to China, accounting for five percent of China's total oil imports. C.N.P.C. owns a 40 percent stake in the Greater Nile Petroleum Operating Company and pumps over 300,000 barrels per day in Sudan. Another Chinese firm, Sinopec, is constructing a 1500 kilometer (932 miles) pipeline to Port Sudan on the Red Sea, where China's Petroleum Engineering Construction Group is building a tanker terminal.
In recent years China's political, economic and military relations with Africa have been subordinated to its quest to secure energy resources in the African continent as energy resources are being secured in exchange for aid, arms or infrastructure investment. China's relations with Africa have shifted from holding a strong ideological bias in support of communist regimes and Marxist insurgencies to being led by market and resource considerations.African states are drawn to China by its non-ideological, non-interventionist approach, which contrasts with the Western approach that places an emphasis on democracy, governance, human rights and humanitarian intervention.
With Sudan and Iran together supplying China with 20 percent of its oil imports, U.S. attempts to contain these regimes bring it into direct confrontation with China's energy security policies.
The United States and China are not the only states vying for energy resources in Africa. Recently, Korea National Oil Corporation obtained 65 percent oil and gas production rights in two Nigerian offshore blocks, while India's Oil and Natural Gas Corporation Videsh obtained a 25 percent stake. South Korea and India are the world's fourth and sixth largest energy consumers respectively. India and China both hold stakes in the Greater Nile Oil Project in Sudan with India having invested US$700 million in Sudan's oil sector. China and India have also been engaged in direct competition for African energy resources, as seen in October 2004 when China outbid India to buy an interest in an offshore block in Angola. [See: "Economic Brief: China's Energy Acquisitions"]
While there have been gestures of rapprochement in Sino-U.S. relations such as the recently initiated Sino-U.S. Strategic Dialogue and both states along with India, Australia, Japan and South Korea establishing an energy partnership known as the Asia Pacific Partnership on Clean Development, the competition to secure energy resources on the world stage could fuel their already shaky relationship. The recent failed bid by Chinese energy company China National Offshore Oil Corporation to acquire U.S. energy company Unocal is evidence of this. Facing a plethora of internal crises ranging from poverty to poor governance and civil war, Africa is likely to emerge as a volatile stage of Sino-U.S. energy competition. African states have been drawn to China by its non-interventionist, non-ideological approach in conducting relations, although China's attempts to secure energy resources in conflict-ridden states by offering aid or arms-for-oil could heighten instability in the region.
Tuesday, April 5, 2011
Brief summary of current post
Current post are our groups attempt to highlight sources of China’s oil, and the amount of consumption within china. This is a good start into looking into researching China’s policies and why it is so intent on expansion.
Here are a few facts from last week’s articles that we learned:
Currently Angola exports more oil than Saudi Arabia into China
Due to the United States ambition to curtail imports of oil from Saudi Arabia, China has begun to pick up the slack- The Saudis now sell over a million barrels a day to China. This represents about a quarter of China's total imports. China is becoming a competitor on the oil market, particularly towards the United States, which could affect the relationship between China and the United States.
China is rapidly expanding and investing worldwide, including countries in Russia, Brazil, Venezuela, Kazakhstan, Ecuador and Turkmenistan.
Other countries Such as Venezuela and Russia recognize the potential market and China and are also looking to capitalize. Although for these particular countries it seems that dealing with foreign trade is turning out to be more difficult than expected.
Here are a few facts from last week’s articles that we learned:
Currently Angola exports more oil than Saudi Arabia into China
Due to the United States ambition to curtail imports of oil from Saudi Arabia, China has begun to pick up the slack- The Saudis now sell over a million barrels a day to China. This represents about a quarter of China's total imports. China is becoming a competitor on the oil market, particularly towards the United States, which could affect the relationship between China and the United States.
China is rapidly expanding and investing worldwide, including countries in Russia, Brazil, Venezuela, Kazakhstan, Ecuador and Turkmenistan.
Other countries Such as Venezuela and Russia recognize the potential market and China and are also looking to capitalize. Although for these particular countries it seems that dealing with foreign trade is turning out to be more difficult than expected.
The Growing Role of Angolan Oil
From the Finance China article: "Angola Becomes Largest Oil Import Source." Accessed 5 April, 2011 http://news.fnchn.com/Angola_becomes_largest_oil_80450.aspx According to this article from last year, Angola topped Saudi Arabi in crude oil exports to China. - The imports for the first half of 2010 were at 21.7m metric tons, up 75.86% from the same period in 2009 - Saudi Arabia exported 20.26m metric tons of crude tons for the same period (up 12.49 from 2009)
- This contradicts the chart we posted earlier. It would be great to find some reliable source of data that might serve as a point of departure, at least in terms of statistics.
- In any case, this introduces a whole new debate - China's involvement in Africa
China & Saudi Arabia Oil Dynamics
From NY Times' article: "China's Growth Shifts the Geopolitics of Oil." Accessed 5 April, 2011 http://www.nytimes.com/2010/03/20/business/energy-environment/20saudi.html?_r=1&pagewanted=2 Few Highlights pointed out in this article: (1) The 2009 global economic recession, which resulted in a notable decrease of the U.S. consumption of Saudi oil (10% less than the 2005-7 peak), simultaneously brought about a change in the Saudis' global oil market policies. The kingdom's exports now tend to go more to China and India. A chief CEO of Saudi Aramco said he believes "this is a long-term transition" - among other things, this might represent a blow to the U.S. oil imports as the ever-growing market in China already made the Saudis scrap its hitherto applied discount for exports to the U.S. The Saudis now have a choice whom to export their oil to, and hence do not need to maintain certain special privileges vis-a-vis the U.S. - on the other hand, as the article also mentions, the diminishing share of Saudi Arabia's U.S. exports might tap into the country's regional security, historically guaranteed by the U.S. However, I do not think this should bother the Saudis too much as the exports to the U.S. are still relatively substantial and very core for the U.S. from long-term perspective. (2) The Saudi-China cooperation at the oil-and-gas market has several dimensions and is by no means short-term. - The Saudis now sell over a million barels a day to China. This represents about a quarter of China's total imports - Several projects run by Saudi Aramco and other companies are already underway in China. They concern primarily a construction of new refineries and other oil-related facilities. (3) The enormous potential of China's future oil demand. - Today, the U.S. is still the top consumer with 18.5 million barrels a day in 2009 - In per-capita terms, this amounts to 22 barels a day per one American. - In comparison, the current per-capita oil consumption in China is only 2.4 barrels a head. - This points to the formidable heights the Chinese demand for oil might turn to in the future years.
Subscribe to:
Posts (Atom)