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
Wednesday, April 20, 2011
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?
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