China's Frantic Search For More & More Energy - Globe & Mail

BEIJING -- "At first glance, the events are unconnected. A possible Chinese takeover of a leading Canadian oil company. A secret submarine in Japanese waters. A border deal in Siberia. Trade pacts with obscure African nations. Diplomatic efforts to protect rogue states in the Middle East.

These seemingly random incidents around the world, however, are united by one crucial phenomenon: China's growing obsession with its energy security. Fearful of its mounting vulnerability to any threat to its oil and gas imports, Beijing has become frantically active in its quest for new energy supplies. The latest example -- its effort to acquire Husky Energy Inc. of Calgary -- is just the most recent of a long series of initiatives to gain fresh energy sources for its booming economy.

China's oil imports leaped by 40 per cent in the first half of this year. It recently surpassed Japan to become the world's second-biggest oil importer. Its own oil production, once large enough to supply its needs, has fallen into steady decline. By the year 2020, China expects to depend on imported oil for 60 per cent of its oil supply, up from 36 per cent today, leaving it increasingly vulnerable to an oil embargo or an unexpected cutoff of supply. Beijing sees the risk of an energy shortage as one of the biggest potential threats to its national security and social stability. It has become fixated with the goal of diversifying its sources of oil, gas, electricity and coal. The Chinese government has reportedly drafted a plan to build a 90-day strategic reserve of crude oil -- much bigger than its previous plan for a 30-day stockpile. It is already building 52 massive tanks near the East China Sea, south of Shanghai, to stockpile a month's worth of oil. Each tank would hold more than 25 million gallons.

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In Africa alone, it has reached agreement to buy oil from Cameroon, Nigeria, Gabon and Angolia. In Latin America, it has signed a trade deal with Brazil to finance a drilling and pipeline program that would provide oil and gas to China, even though the Brazilian deal is estimated to be three times more expensive than simply buying supplies on the open market. To secure Russian oil, Beijing gave favourable terms to Moscow to settle a long-standing border dispute on a Siberian river. Russia reciprocated last week by promising to deliver as much as 420 million barrels of oil by train to China annually by 2010, up from the present level of 140 million barrels. China and Japan have been jousting for the right to receive an oil pipeline from Russia, although the latest indications suggest that Japan might win the battle. China's obsession with energy security has put it on a collision course with the United States, which disapproves of Beijing's eagerness to cut deals with "pariah states" such as Iran and Sudan."

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http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20041129/RCHINAOIL29/TPBusiness/Canadian

as we don't blow ourselves all up fighting over it.

for the last drops of ME oil.

"Interesting times" indeed...