China gets its first real grip on Arab oil

Discussion in 'Defence & Strategic Issues' started by RAM, Nov 5, 2009.

  1. RAM

    RAM The southern Man Senior Member

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    China gets its first real grip on Arab oil

    Baghdad's deal Tuesday with BP and the China National Petroleum Corp. to invest $15 billion in the giant Rumaila oil field to help rebuild Iraq's ramshackle oil industry gives energy-hungry China its first real grip on Middle Eastern oil.
    But the 20-year contract carries immense risk as another bout of sectarian savagery looms in Iraq.


    Still, China has demonstrated that it's prepared to gamble -- and pay top dollar -- as its companies roam the globe snapping up energy resources, particularly in West Africa.Before Wednesday's deal, Beijing had purchased an estimated $15 billion in oil and gas supplies worldwide this year alone. That's double the figure for all of 2008.

    In August, Sinopec, one of China's three state-owned oil giants, paid $8.9 billion to purchase the Swiss-Canadian firm Addax, which had holdings in Africa and the semiautonomous Kurdish enclave in northeastern Iraq.

    That should have been China's access to Iraq's oil riches, but because the regional government in Kurdistan had signed separate deals with foreign oil companies with Baghdad's approval, Sinopec's acquisition meant it joined the federal government's blacklist of companies working with the Kurds.

    The Iraqi Oil Ministry will hold its second oil auction in December, and other Chinese companies may be bidding for other oil fields then. China is also a major purchaser of Iranian oil, in defiance of U.S.-led sanctions, and recently signed a major deal to develop the giant South Pars gas field in the Persian Gulf.

    Whether the Chinese will pursue new oil sources in other parts of the Middle East is not clear. The Arab oil fields, apart from those in Iraq, are all nationalized, and their governments have shunned foreign participation.

    Iraq is only throwing open its doors because it needs foreign investment -- as much as $100 billion by some estimates -- to refurbish its long-neglected oil industry and boost production to fund reconstruction.

    But Saudi Arabia and other Gulf producers are now looking to China as their main export market."Very oil-rich countries, particularly in the Middle East, see China and East Asia as becoming the major demand center, and therefore they want to build diplomatic and commercial links with future major customers," says Philip Andrews-Speed, an energy expert at Dundee University in Scotland.

    China's expanding economy has allowed it to take advantage of low prices caused by the global meltdown to scoop up energy deals."They're cash-rich, which is why they can offer better terms to the host country or company," according to Wu Kang, an energy specialist with the East-West Center in Hawaii.

    The Chinese also offer infrastructure investments that poor countries find attractive. China is also prepared to deal with non-democratic regimes with unsavory reputations. For instance, the China International Fund is negotiating a major deal, purportedly worth as much as $7 billion, with the much-criticized military-backed government of Guinea in West Africa to prospect for oil and minerals in exchange for major infrastructure and minerals projects. These include power generation and starting an airline.

    That has triggered accusations that Beijing will be throwing an economic lifeline to a regime that slaughtered 150 opposition protesters several weeks ago and now faces international sanctions.

    In some cases, governments see China as a political counterweight to the United States and believe that the geostrategic pendulum is now swinging Beijing's way.

    The China National Offshore Oil Corp., another of China's three majors, is negotiating with Nigeria's government on another blockbuster purchase of some of the planet's richest oil blocs.

    It wants to buy licenses held by major Western oil companies such as Chevron, Shell, Total and Exxon Mobil when their leases run out. These hold 6 billion barrels of oil, equivalent to one in every six barrels of Nigeria's proven reserves.


    The value of the Chinese offer has not been official disclosed, but industry insiders say it's as much as $30 billion.China's willingness to make deals with corrupt and disreputable regimes, in stark contrast to the human-rights focus of the Europeans, and even to provide them with arms, could backfire on the Chinese, industry analysts say.

    "China's scramble for resources betrays a lack of confidence that global commodity markets can provide the fuel for its industrial development," The Financial Times noted recently.

    "Locking in specific sources of oil may give China a sense of supply security, but in the long term it leaves it open to the vagaries of oil suppliers' politics."

    China gets its first real grip on Arab oil - UPI.com
     
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  3. RAM

    RAM The southern Man Senior Member

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    Chinese giant to buy US oil assets: company ..


    Norwegian energy group Statoil said on Wednesday it was selling some of its oil assets in the United States to China's state-owned CNOOC, marking the first step by a Chinese energy major into the US market.The sale, announced along with the company's quarterly results, involves a limited stake in four exploitation licences acquired by Statoil in 2007 and 2008 for deep-water blocks.

    "On 29 October Statoil signed a farm down agreement with the Chinese company CNOOC (China National Offshore Oil Corporation) involving a number of Statoil's leases in the Gulf of Mexico," Statoil said in a third-quarter earnings statement.
    Statoil declined to disclose the value of the transaction but spokesman Kai Nielsen told AFP that the size of the deal was "very small."

    In 2005, CNOOC was forced to cancel an 18.5-billion-dollar (12.4-billion-euro) deal with US company Unocal following domestic political opposition in the United States over the sale of strategic assets to China.But with the credit crunch slowing down offshore oil exploration, opposition to Chinese investors is now less likely, the Wall Street Journal said last month.

    CNOCC will be acquiring 20 percent of the Tucker prospect and a 10-percent stake on the licences of the Krakatoa, Cobra and Logan blocks, according to the deal reached October 29.
    Statoil will remain the operator of the four blocks.

    "In the Gulf of Mexico, it is customary to optimise the portfolio and spread risk involved in exploration drilling efforts," Statoil's spokesman said.In its earnings statement on Wednesday, the firm reported a 13.9-percent rise in profits, largely due to financial items including currency effects, but voiced caution about the prospects for an economic recovery.

    "Although we see signs of improvement in the global economy, there is no firm evidence that industry investment, employment and private consumption have recovered in a sustainable way," chief executive Helge Lund said.

    "This calls for cautiousness. Statoil is continuing to reduce costs, and we still have the flexibility to adjust our activity in response to a volatile business environment," he added.

    Statoil's net profit in the third quarter was 7.4 billion kroner (1.3 billion dollars, 872.2 million euros) compared to 6.5 billion kroner in the same quarter last year.

    Statoil is 67-percent state-owned.


    Chinese giant to buy US oil assets: company - Yahoo! Canada News


    Chinese giant to buy US oil assets: company | France 24
     

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