The People’s Republic of China plans to invest $13 billion in oil and gas exploration this year, after the Communist Party leader Xi Jinping has done a tour of oil rich neighbors to strike deals. Chinese state oil firms are at the same time buying greater stakes in foreign oil holdings, hoping to satisfy the appetite for energy of China’s incipient consumer class.
Xi toured neighboring Central Asian countries early in September on an “energy diplomacy” tour, spending money and shaking hands as he went. In Turkmenistan, he inaugurated production at the massive Galkynysh field, a joint venture, tripling China’s imports from that country, according to The Economist.
In Kazakhstan, the PRC put up $30 billion in deals that included a 8.33 per cent stake in the giant Kashagan oilfield, and in Uzbekistan he cut deals for $15 billion in oil, gas and uranium, said The Economist.
Striving to maximize its own energy production, the PRC has also increased its investment in domestic oil and gas exploration, state media announced this week, while state oil company Sinopec bought up a stake in an American oil company’s Egyptian holdings.
Aware that the hoped-for transition to a consumption-led economy will be fueled and driven by increased energy consumption, China plans to double its domestic gas production level by 2020, from the 2011 production level. But to meet demand they also will need to increase natural gas imports, says Oilprice.com, a website that monitors the price of oil.
China’s strategy to ensure a stable source of oil imports for the future is to buy into its poorer, but oil rich neighbors’ energy development projects.
Snapping up overseas hydrocarbon assets, China’s state owned China National Petroleum Corp (CNPC) has committed $12 billion to a venture in Ecuador with state-owned PetroEcuador and its counterpart in neighbouring Venezuela as joint venturers, reports The Australian.
In North America, China has recently acquired important stakes or out-right ownership of major Canadian energy firms, such as the US$15.1 billion acquisition of the oil-sands operator Nexen, says Oilprice. The publication says that now Chinese companies are targeting the smaller Canadian energy companies.
China’s energy acquisition expansion into Africa continues with a recent $5 billion investment in Kenya, and financing infrastructure in Uganda, where Cnooc Ltd. of China, a state-owned company, is partnering with European countries to develop Ugandan oilfields, estimated to hold 3.5 billion barrels.
Meanwhile, in Beijing, some citizens are hoping to win a permit to buy auto licenses in an official lottery at odds 80 to 1.