China's Search for Oil and Security

The facts are staggering: China?s oil imports were up 30 percent in 2003. The International Energy Agency estimates that China will replace Japan as the world's second-largest oil user in 2004. China, the world's fifth-largest producer of crude oil, was a net-exporter of crude little more than a decade ago.

With statistics like these, it?s no surprise the country has gone on a massive energy campaign. The $25 billion Three Gorges Dam and its 26 700-megawatt turbine generators will produce, according to a government website, the energy equivalent of 18 nuclear plants or the burning of 40 million tons of coal. Impressive figures, but the project is not due for completion until 2009. Another interesting project is the world?s first floating nuclear facility to be built in China by Russia. This revolutionary, floating reactor will allow the Chinese government to take energy where it is needed. But it too is years from completion. With the economy skyrocketing and energy shortages commonplace, the country cannot afford to wait for projects like these to bear fruit. More secure and immediate sources of energy are necessary and oil, predictably, has taken center stage.

China currently imports 60 percent of its oil from the Middle East - mostly Iran, Saudi Arabia and Syria. However, recent activity has shown China would like to wean itself off the volatile Middle East. For example, Chinese president Hu Jintao recently visited three energy-exporting African nations - Egypt, Gabon and Algeria - to secure oil sources and build energy relationships for the future. In addition to the nations of Africa, Chinese deals with Russian firms have become commonplace. Yukos, Russia?s largest oil company, and state-owned China National Petroleum Corporation recently finalized a deal for 10 million tons of oil annually.

Even though China has been successful in securing additional sources of energy, the problem remains it is a latecomer to the energy game. Most industrialized nations have secured their immediate and near-future sources of energy. By arriving late, China feels the need to be aggressive and take whatever oil it can, which it does, often against objections from the west. This aggressiveness and disregard of western opinion has changed geopolitics greatly. For example, many western countries refuse to do business with governments suspected of proliferation or of human rights violations. The Chinese, on the other hand, are not deterred by such inhibitions. The African nation of Sudan, where American companies are prohibited from doing business due to the country's ties with terrorism, enjoys China as one of its top investors. Another example is China's continued cooperation with Iran, a country on President Bush?s ?axis of evil? list.

It is inevitable that as China continues its phenomenal growth, it will increasingly bump against the US in many areas, not least energy. Some analysts believe the seeds of the next world war are quietly germinating as the US and China attempt to secure the last drops of the world?s main energy source. The increased use of natural gas could prolong such a scenario, but gas too is depletable. Cooperation remains the best solution, but will the countries cooperate?

Globalization may save the day. The stability of both countries relies heavily on the success of the multinational corporations of America. Through these corporations, China and the United State have created a system of reliance, where one cannot survive without the other. These ?big-bad? companies may be the binding tie that ensure the battle for the world?s remaining oil, will be no battle at all. At the very least, the multinationals serve as a source for dialogoue and future cooperation as the international-political-economy continues to change in dramatic fashion.


Author: Nick Muessig