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Guest Post: The Hungry Dragon: China's New Oil Market
Submitted by Marin Katusa of Casey Research
The Hungry Dragon: China's New Oil Market
If you ever happen to eavesdrop on a conversation between energy
investors, two words are sure to crop up – China and oil. Usually,
they’re used together and usually, it’s about China’s increasing
presence on the global oil scene.
It’s a pretty safe bet that, as one of the world’s fastest growing
economies, China needs a lot of energy. And with an oil appetite that
grows by 7.5% each year, seven times faster than the U.S., the
country’s reserves don’t even begin to compare to the consumption.
But fuelling the blistering pace of its economy is China’s number one
priority, and it is on a mission to lock down its energy interests all
around the world. The emerging powerhouse has often felt that it was
the last one onto the energy playing field with a lot of catching up to
do.
Today, Chinese national oil companies (NOCs) are setting up shop
everywhere from the Middle East all the way to the oil sands of Canada,
and they’re open for business. The three NOCs – CNPC/PetroChina,
Sinopec and CNOOC Ltd – are slated to produce a record breaking one
million barrels daily. That’s Australia’s daily fuel consumption!
It isn’t just their oil production that’s going through the roof. Since
2009, China has committed nearly US$25 billion into corporate and
asset acquisitions. China isn’t going it alone either, and fully
realizes the importance of forging partnerships with other
international oil companies to develop oil fields.
And with Beijing firmly behind them, they’re only doubling their
efforts this year. Chinese NOCs accounted for nearly 20% of all global
deal values in the first quarter of 2010. This share will only get
bigger as the year carries on and energy security continues to dominate
the agenda.
Armed with strong finances, an aggressive approach, and implicit
government backing, Chinese companies are well placed to spearhead the
nation’s mission of diversifying its international energy portfolio.
The latest thing to catch their attention: the mysterious oil elephants
of East Africa.
Hunting for Elephants: Fortune Favours the Bold
Africa might be the last place left on Earth where elephant deposits –
very large oil and gas deposits – remain to be found. But contrary to
popular belief, the real money in African oil is not in the West nor
the North, but thousands of miles away in East Africa.
It is here that one of the last oil elephants of the world waits. A
lack of significant discoveries and long-term instability left the
region largely unexplored and ignored for the last 50 years. Until last
year, when Irish giant Tullow Oil found over two billion barrels under
the waters of Lake Albert, Uganda.
The excitement running through the region’s oil market at the moment is
palpable. The first annual Eastern Africa Energy Week held this year
in Nairobi, Kenya, was resplendent with the heavyweights and superstars
of the oil business; prominent amongst them were delegates from
China’s CNOOC, who were out in full force. That they were all there to
study strategies, policies and regulation, and the critical issues
facing companies in the market shows exactly how seriously they’re
taking East Africa.
In a region where the market is populated largely by smaller-cap firms
hoping to get in on the ground floor of emerging energy-nations, the
takeover potential is enormous. It’s no surprise then that CNOOC is
jostling with the big names of oil exploration in Africa – Tullow,
Total SA, and Anadarko – to get a slice of what could be an energy
goldmine.
But East Africa will be no cakewalk for oil explorers. They will face a
multitude of challenges and there is risk by the bucket in each
venture. Only those companies with the right project locations and the
right people to execute business plans in the difficult working
conditions of East Africa will survive to win the jackpot. So pick your
portfolio wisely and buckle up for this jungle ride… it’s going to be
intense.
»
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Where is Marla and Nick?
They're looking for "are".
:L
when do ben and tim get indicted for screwing us over so bad our eyes are popping out of our heads?
when?
Some good folks over there at CR. Been reading them for a while. And lets face it, China needs everything.
That's the only reason Africa stays so poor. Every time something is found, Whitey acts like its his and starts his exploitation BS all over again. The only thing Africa needs to do is take back their own resources with military force if needed.
I agree. They should rely on their own capital and expertise. That will insure it stays in their hands
Hilarious!
Cowdiddly, you are joking, right? If it weren´t for hopelessly corrupt, criminal and grossly incompetent African leaders, Whitey would have a much more difficult time stealing the resources. Regardless, it is ´chinkey´that is now the problem. Fortunately for the Chinese, they thoroughly understand how to do business in African, unlike Americans who want steal everything via military force whilst claiming they are liberating the poor Africans from Tyranny and Terrorism.
Absolutely stand by my statement. I never mentioned the obvious problem of corruption. They need to call the military in on Debeers, Total, Shell and everyone in between, One of the richest continents on the planet and has been exploited for 100s of years while its people starve in poverty. Africa would not be poor if it could take back what is rightfully theirs PERIOD.
The problem with Africa is Africans. People need to stop bitching about outsiders keeping Africans down and start wondering why in the 100,000 years of the modern homo sapien form there has never been a black African civilization of any size, organization, or lengevity.
I guess we won't count Egypt, The Carthegenians or even question why Greeks have Nubian features
Good. Let's not. It's embarrassing enough that the non-arab part of the continent was barely beyond the level of neolithic hunter/gatherer when the rest of the world arrived, let's not exacerbate the issue by attempting to argue that the Egyptians were black or that the Nubians amounted more to a frivolous point of pride during February.
After the rest of the world arrived? The Egyptians were White?I guess after that reply my only remaining question is "Was it hard getting your GED"
The Egyptians were the same people as sub-Saharan Africans?
Keep living in dream world.
They were not. The trading opportunities reported and exploited by merchants did not correspond with neolithic hunter/gatherer level.
Most importantly though, whatever they are do not exhonerate others from their actions.
Even if it is what some people like to do.
How did you make it past the equation?
Like
Cowdidly, your approach worked out so well for Zimbabwe. They did exactly, to the tee, what you've recommended.
You might want to come up with Plan B.
Cow, actually capitalism minus exploitation could work well for every one.
But, there is an insatiable thirst for conquest, not conviviality in our genes.
It could have been how you say, but it cannot.
This paradigm will shatter under the weight of it's own ugliness.
The sooner, the better.
ORI
http://aadivaahan.wordpress.com
Thirsty Dragon?
Peak Roil.
Last thing we need is 1.5 billion Chinese and 1 billion Indians to compete for limited natural resources. There are not enough for their breeding patterns and there is a reason why for thousands of years they lived so frugaly. This path is unsustainable and whoever thought of uplifting third world economically is a suicidal maniac. This will all end in bust. Same applies to food and water.
Enjoy your cheap chinese made low quality crap consumer goods meanwhile as the only benefit of Globalization.
I disagree. I think it's exactly what we need. The faster we deplete the resources, the sooner we get on with this.
Frankly the suspense is torturing me.
Don't worry, the international bankers have a plan to make them debt slaves just like you. Their breeding patterns will be stifled once the credit/debt machine takes them over.
This has historical relevance..today///oil
Iran announced the capture of Abdulmalek Rigi, the boss of the terror organization Jundullah, which works for NATO. The capture of Rigi represents a serious setback for the US-UK strategy of using false flag state-sponsored terrorism against Iran and Pakistan, and ultimately to sabotage China’s geopolitics of oil. The Iranians claim to have captured Rigi all by themselves, but the Pakistani ambassador to Teheran is quoted in The Dawn as claiming an important role for Pakistan. The Iranians say that Rigi was attempting to fly from Dubai to Kyrgystan, and that his plane was forced to land in Iran by Iranian interceptors. This exploit recalls Oliver North’s 1985 intercept of the accused Achille Lauro perpetrators, including Abu Abbas, forcing their Egyptian plane to land at Sigonella, Sicily. But other and perhaps more realistic versions suggest that Iran was tipped off by the Pakistanis, or even that Rigi was captured by Pakistan and delivered to the Iranians.
Jundullah, otherwise known as the Rigi organization, is a clan-based Mafia organization that has long infested the Iran-Pakistan border. The Rigis are traditionally smugglers and drug pushers of royalist persuasion, and now they have branched out into terrorism. Jundullah is mounting a Sunni rebellion against the Shiite Iranian regime in Iranian Baluchistan. They have blown up a Shiite mosque, killing 25, and managed to kill 50 in a bombing in Pishin last October, where their victims included some top commanders of Iran’s Revolutionary Guard, against which Mrs. Clinton has now declared war. There is no doubt that Jundullah is on the US payroll. This fact has been confirmed by Brian Ross of ABC News, the London Daily Telegraph, and by Seymour Hersh in the New Yorker. Hersh noted that Jundullah has received some of the $400 million appropriated by the US Congress in the most recent Bush-era regime change legislation targeting Iran.
Jundullah is a key part of the US-UK strategy of fomenting ethnic and religious civil war in both Iran and Pakistan. Jundullah is a twofer in this context, since it can help destabilize both sides of the Iran-Pakistan border. Baluchistan has special importance because any oil pipeline linking Iran with China must go straight across Baluchistan. Jundullah’s false flag jihad is a means to make sure that strategic pipeline, which would help solve China’s energy problem, is never built.
There is also no doubt that Jundullah functions as an arm of NATO, a kind of irregular warfare asset similar in some ways to the KLA of Kosovo. Rigi is reported by the Iranians to have met with Jop de Hoop Scheffer when he was NATO Secretary General. Rigi has also met with various NATO generals operating in Afghanistan. Who knows — he may have met with McChrystal himself, a covert ops veteran from Iraq.
This capture comes at a moment when Baluchistan is the object of intense US-UK exertions. The current US-NATO offensive in southern Afghanistan targets Marjah and the rest of Helmand province, which directly faces Baluchistan. Many observers were puzzled when the US and NATO publicized the Marjah offensive in advance. Militarist talking heads like General Barry McCaffrey responded that the main goal of the Marjah offensive was not to destroy the Taliban, but to drive them out of the province. It was thus clear from the beginning that the real goal was to drive the Helmand Taliban fighters into Pakistani Baluchistan. Why?
A statement from the Afghan Taliban covered on the RIA Novosti web site suggests that the real goal of the US-NATO offensive in Marjah-Helmand is to attack Chinese economic interests in Pakistani Baluchistan, and especially the port of Gwadar, one of China’s largest overseas projects. If the US can push the Taliban into Pakistani Baluchistan and into the area around Gwadar, they will have a pretext for militarization – perhaps through Blackwater mercenaries, who are already operating massively in Pakistan, or perhaps through direct US military involvement in the zone. US jackboots on the ground in Baluchistan would interfere mightily with Chinese economic development plans. They would also allow the US to commandeer Gwadar as the home port of a new NATO supply line into southern Afghanistan, allowing the avoidance of the Khyber Pass bottleneck. The US could also use Baluchistan as a springboard for bigger and better terror ops into Iran, electronic surveillance of Iranian activities, and so forth.
The US and NATO had evidently planned a double envelopment of Baluchistan, with Taliban fighters from Helmand arriving from the north, while the Jundullah escalated their own activity on the ground. Now that Rigi has joined his brother in Iranian jails, Jundullah has been decapitated, and the NATO strategy has consequently been undermined. Iran has bagged a dangerous terrorist foe. Another winner is Pakistan, where The Dawn celebrated the capture of Rigi as “a godsend” and “a lucky break” for Pakistan. By helping Rigi to fall into Iranian hands, Pakistan may have finally found an effective way to counter the US-UK strategy, which notoriously aims at the breakup and partition of Pakistan. The coming Iranian trial of Rigi may go far towards exposing the real mechanism of terrorism in today’s world, with the CIA sitting in the dock next to Rigi.
Thanks for the post. I do have some questions:
Not that I would ever mind, but this is from awhile back, no? The reason I ask is because you say, "against which Mrs. Clinton has now declared war." What exactly do you mean by this, and when did she do this? Where was I?!
Also, a little off topic, but still relevant, isn't the other side of the Anglo-Amerikan regime holding onto a live grenade known as the Dollar? Why do they not drop it and duck and cover? Is their best interest not in ending the dollar, so as to end the US' capability to prolong war? Just askin'.
Always enjoy your posts.
Hillary to China: Vote for Iran Sanctions, or Face Gulf Conflagration and Oil CutoffFebruary 6, 2010For her Jan. 29 speech at the Ecole Militaire in Paris, Mrs. Clinton was evidently wearing that stylish new French perfume from the House of Sarkozy called Chantage – meaning blackmail. Mrs. Clinton gloats because she thinks she has the Chinese leadership in a bind. As she stated, she knows that China increasingly depends on oil from the Gulf. She demanded that China vote for crippling sanctions against Iran in the UN Security Council this month, while Sarkozy — the craziest of all western leaders against Iran — controls the presidency of that body. For China, approving crippling sanctions against Iran means in all probability the loss of 10% to 12% of its oil imports, the aborting of some $80 billion in development projects by Beijing in Iran, the sacrifice of hundreds of billions of dollars worth of oil which the Chinese have locked in via futures contracts, and, above all, a farewell to the best chance of getting a secure overland oil pipeline far away from the US-UK fleets — the pipeline from Iran via Pakistan into China.
If the Chinese fail to captitulate on this point, Mrs. Clinton darkly hinted, the US would no longer restrain the Israelis, who might then launch their long-threatened air attack on Iran, which the US has emphatically vetoed over the past two years. At that point, the Iranians would try to interdict Gulf maritime traffic and close the strait of Hormuz, meaning that about a third of China’s oil could be cut off. (The other 20% comes from Saudi Arabia.)
The US-UK elite is in a state of collective hysteria about the growth of Chinese economic power. China is now the largest exporter in the world, and officially about to become the second largest economy, passing Japan to challenge the US.
The US is way behind China in fast rail, and will soon fall behind in modern nuclear energy production. China is clearly aiming to put astronauts on the moon, but the Obama-Orszag NASA budget makes clear that the US is going nowhere when it comes to manned space flight. If US elites really want to keep pace, they should put aside their feckless attempts to contain China by subversion, economic warfare, and fomenting conflicts in the Guif and on the India-China border. Match the Chinese programs in nuclear reactors, fast rail, and manned space flight, or prepare for the status of has-been.
But for right now, the Iran attack scenario, which had been pushed to the back burner by the US National Intelligence Estimate of December 2007 — which stated that there was no Iranian nuclear weapons program — is once again operational, this time as a means at striking at China’s oil supply.
P.S. The next fiat....SDR's
Sarkozy is a chump. I have wondered why no one on the MSM has questioned the fact that his brother is Carlyle Group (along with the Bushes and Bin Ladins).
So what if China called Hilary's bluff (no Iran sanctions), and we went into WWIII? China would be no worse off than the US, and this could mean the end of the empire; wouldn't China love that? I understand it is a game of chicken (the oilgarchs and kleptocrats play kids games!), but it appears we are destined to war with Iran, so I feel China will dump the dollar at the slightest inkling of war.
Nuclear energy might be a good temporary stop gap, but due to storage costs of uranium and plutonium, the EROEI is poor (because the storage time is infinite). I do not think that will mitigate peak oil. The light rail issue is another story. I can't believe Barry failed at this!!! Ok, I can...but where are the liberals that should be on his ass?! Drinking Starbucks in their Subarus?
And every time I hear "SDRs" I imagine Soros, the used car salesman he is, saying with eyebrows raised, "It iz backed by goled!"
Storage costs?
You might be living in dark ages not to think of a mutually benefitial deal.
Take a country, underdevelopped and unable to developp nuclear energy pattern and sitting on mine of uranium.
Take a country able to.
The latter buys uranium from the former and sends back the radioactive wastes.
Everyone is happy:
one has nuclear energy, which it could not have without the other.
The other has a radioactive environment, which it could not have without one.
Dude....it's about who controls the trading routes because he who owns the trading routes owns the trading currency and he owns the trading currency owns the banking system and he who owns the banking system controls everything.
If you want to tie this together look to the history of the links between Dell Dailey and Jundullah aka Mujahaddin of Iran. Dailey had a shot at getting them off the US declared terrorist organisation list with his public commentary about 18 months ago. The State Dept and Hillary stood him up probably based on the danger of the precedent on the historical record. That Dailey ran them seeking intelligence, selective assassination, disruption and the long shot to call on them for regime change purposes was the very basis of his seeking the pardon.
Silver has broken todays trend line. Gold looks to be doing the same. Oil should follow shortly....
Dollar weakness equals weakness in oil ? What a day!
Whooooops !
Looks like Jeff Immelt just jumped off the reservation-not just China's but O ba ma's too.
http://www.ft.com/cms/s/0/ed654fac-8518-11df-adfa-00144feabdc0.html
Wow...was Immelt threatning China?
Trade wars are coming...
And with only 1% global renewable energy, the lack of oil investments these last 10 years, the oil production will lag any early economic recovery for the next 5 years.
I think oil will be below 90$ for a long time, and every time it goes above that, the economy will pull back till it's back below 80$ and start over.
Also, Lockheed has plans for new commercial passenger planes for 2035, all still running on kerosene. At least they painted it green...
http://static3.hln.be/static/FOTO/pe/6/16/12/media_xl_3775002.jpg?20100630182213
We'll soon be faced with the scam of renewable energy and as the sun will reach solar maximum in 2012 we'll really start to feel what global warming feels like.
Tomorrow is the first day in Europe that there are temperatures of 35 to 38 degrees in the north and 40 in the south. Industrial shutdown is imminent for Europe people! And is only the 1st of July.
For me it's not Peak oil where we have to worry about. But global warming is. We are not prepared for the droughts, failed harvests... There should be build a infrastructure to cope with it. Otherwise, millions will dy
Why not do what Europeans did in the past? Hire some Africans to wave large feathers and fans to stir the hot, sultry, Summer air. It fits perfectly with all the austerity talk, provides aide to the suffering continent of Africa, and is so eco friendly, Scientific American magazine might even feature it on the cover.
Global cooling could be bad too. Who knows what the weather will do. Peak oil on the other hand is at the doorstep, beckoning to come inside. It will happen very soon, this why the banksters decided to collapse the economy in '08; to consolidate monie one more time.
Look for both natural and man-made catastrophes. Economic, Political, Ecologic and Environmental Shock and Awe. No way this ends without Military conflict. Cause the problems and then present the solutions, when the solutions were what they wanted all along. One play in a short Playbook. Same as it ever was.
Global warming would be a good thing. More land for agriculture, more food. And more employment opportunities for all of us after all of this comes crashing down.
If you see a guy wearing a DOW 9,000 hat picking corn in the fields of Iowa someday, be sure to say hello.
The hidden tax of more demand for resources. Yep...
Or a synonym for inflation. That too...
http://www.ajc.com/business/georgia-power-request-tops-562103.html
And the squeeze continues. In the end, gold and silver must be bought, contracts must clear. Nothing you, me or any 'watch dog' group can do about it.
The politics of East Africa are just as bad as West Africa where numerous oil ventures are being held in the coastal regions. I don't think the Chinese ventures will be fruitful and will be relying on mostly the Russians and the Middle Eastern countries for oil for a long time.
Moreover, the natural resources markets is where some serious potential is going to be. Specifically, the Chinese are investing a huge amount of money into the Central Asian region. There is a lot more control in that region of the world that the Chinese have with the Russians where there is an understanding in controlling the natural resources there.
Symbolic posturing by China regarding Iran sanctions; that's a huge well the dragon fully intends to drink at. An Israeli strike will damage the US far more than anyone else - the bigger they are, the harder they fall. Clinton threatening China? With higher oil prices? Yeah, those higher prices won't hurt the US; and China can pay for it with all those US treasuries.
As said above, lets get this shite over and done with, already, and move on with hopefully a more enlightened, if not sane, society.
China is meanwhile exporting massively refined oil products. That´s one of the reason´s for its huge "demand"...
Same with secondary aluminium products to Japan. Indirect Yen for USD swap.
If they keep growing at 7.5% they will need double the oil they use now, in 9.3 years. Even assuming nobody else has any growth there is no way in hell they will be able to find an extra 9 million barrels a day (around 18mb/d total) at that time, since oil is currently being consumed at a rate of 86.4 mb/d and world wide oil discoveries have been less than annual production since 1980.
BP's assets in Argentina are a strategic buy for its growing positions throughout South America. While the US social fabric is weakened by drugs, China expands its influence as the Royals once did without challenge by Hillary and O.
Certainly a lot of details like that to take into consideration. Thanks windows vps | cheap vps | cheap hosting | forex vps