| Pragmatic China Resorts to Trading with | | | | recent special edition of the McKinsey Quarterly, China |
| Rogue Nations for Energy Security | | | | will be forced to heavily invest in refineries for all the |
| At the mercy of a ruthless global energy market, | | | | crude oil it has committed for, "To keep up with surging |
| pragmatic China has turned to nations which are | | | | demand, the country needs to build a large, |
| shunned by U.S. interests. One productive Silk Road | | | | technologically world-class refinery every year for the |
| leading to China begins in Iran. More specifically, it starts | | | | next 15 years, at a cost of $2 billion apiece." China |
| in the Yadavaran oil fields where the Chinese oil | | | | lacks the refining capacity to meet its current needs. In |
| company Sinopec plans to import about 150,000 | | | | the first half of 2006, China's imports of refined |
| barrels of crude per day, after it has developed these | | | | petroleum products jumped by nearly 50 percent, |
| oil fields. Initially, the October 2004 deal was reportedly | | | | compared to the same six-month period in the |
| valued at $70 billion. However, additional developments | | | | previous year. |
| and China's substantial purchase of Iran's vast natural | | | | Although Venezuela hopes to become one of China's |
| gas reserves may increase the value of this | | | | top three oil suppliers, it is likely more hyperbole than a |
| multi-decade energy deal to more than $200 billion. | | | | realistic possibility before 2010. As China's proven oil |
| What could go wrong? Look at the daily headlines: Iran | | | | reserves continue to deplete, it may very well have to |
| wants to enrich its own uranium. Unless this situation is | | | | turn to Venezuela at some point for this country's vast |
| resolved, escalated political tensions could impair | | | | oil reserves. Outside of the Middle East, Venezuela |
| China's ability to import oil and gas. Obviously, China | | | | may have one of the last great oil resource - |
| would take great pains to avoid an Iraqi rerun in Iran. | | | | reportedly at greater than 80 billion barrels of crude. |
| Out-maneuvered by western oil companies in obtaining | | | | The question is not if, but how fast can,Venezuela |
| many of the world's proven oil reserves, China has | | | | accommodate China's ravenous appetite for its |
| cultivated the Sudan as its largest oil provider. Sudan | | | | country's oil? |
| depends upon the pragmatic Chinese for its economic | | | | Venezuela also has the largest natural gas fields in all |
| and military strength. China is also the principal source | | | | of South America. Earlier this year, Brazil and |
| of hard currency for Africa's largest country. Rejected | | | | Argentina (two of China's favorite Latin American |
| by the world's community for the genocide it is | | | | trade partners) discussed with Venezuela the |
| committing in West Darfur, Sudan exports its oil to | | | | possibility of building a gas pipeline across the Amazon. |
| China for Chinese weaponry. China finds little | | | | A 5000-mile gas pipeline would need a port destination |
| competition for Sudanese oil. The Chinese are the | | | | for LNG tankers to supply China. Instead, talk of an oil |
| largest single shareholders dominating Sudan's oil | | | | pipeline through Colombia could be replaced by a gas |
| company consortium. It is the largest investor in a | | | | pipeline. |
| 1,500-kilometer pipeline delivering Sudanese oil to the | | | | China's approach, in dealing with what the |
| Red Sea, which is then shipped by tankers to China. | | | | Anglo-American alliance call "rogue nations," reflects |
| China has not limited its African oil purchases to one | | | | one of reported non-interference in a country's political |
| country. Another blighted nation, Angola believes it | | | | affairs. It is a Chinese pragmatism, which many find |
| could soon surpass Nigeria as Africa's largest oil | | | | amoral. By contrast, in what way is America judged |
| supplier. According to the World Bank, China may have | | | | around the world by its military invasion of Iraq? When |
| recently offered Angola about $9 billion in credits and | | | | U.S. President Bush recently criticized Vladimir Putin |
| loans. Two years ago, it was reported that China | | | | about democracy in his country, the Russian President |
| extended a $2-billion loan to Angola for 10,000 barrels | | | | pointed out that Russia's democracy was quite |
| of crude oil per day. Now, it appears China is eager to | | | | different from the one the U.S. had created in Iraq for |
| help Angola build sufficient infrastructure in that country | | | | the Iraqis. One has to wonder how long China's laissez |
| to develop another strong energy source. | | | | faire doctrine will last. And whether China can continue |
| Hoping to create a Silk Road across the Pacific from | | | | developing new energy silk roads at the rate its GDP |
| South America, China has continued its hunt for energy | | | | growth commands. |
| security by developing ties with Venezuela's Hugo | | | | Some believe China doesn't need so much oil right |
| Chavez. This may come to naught. Venezuela's highly | | | | now. In the first half of 2006, according to Xinhua |
| sulfurous crude would first have to be refined in the | | | | news, China's refinery output was seven percent less |
| United States. China lacks the refineries for handling | | | | than the country's domestic crude-oil production. |
| the heavy crude oil. Over the past year, China's oil | | | | Despite producing 85 million tons of crude oil, China still |
| imports from Venezuela amounted to orimulsion from | | | | imported 70 million tons of oil (on top of 12 million tons |
| the Orinoco Tarbelt, mostly used for asphalt. | | | | of refined oil). Is China hoarding to avert a future |
| New refineries, however, can be built to remedy the | | | | political crisis, or does it expect its energy 'silk roads' to |
| heavy oil Venezuela might provide. According to a | | | | soon close or become blockaded? |