Beijing's oil diplomacy

Survival

Volumn 44, Issue 1, 2002, Pages 115-134

  Jaffe, Amy Myers ^a   Lewis, Steven W ^a  

^a RICE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0013333595     PISSN: 00396338     EISSN: None     Source Type: Journal    
DOI: 10.1093/survival/44.1.115     Document Type: Article

References (62)

1. 'Asian Demand Flat, and May Get Worse', Petroleum Intelligence Weekly, 30 July 2001, p. 2.
2. National estimates provided by Asia Pacific Consulting; for estimates up to 2010 of national product use and use in four southern provinces see Sinopec, Zhongguo shiyou shichang xianzhuang ji xiangguan zhengce (The Current Situation in China's Oil Market and Related Policies) (Beijing: Sinopec Information Center, 1999); for a thorough exploration of the oil, gas and oil products market in China in 2000 see China National Petroleum Corporation (CNPC), 2000 nian zhongguo shiyou shichang fenxi baogao (In-Depth Analysis of China's Oil Market in 2000) (Beijing: CNPC Information Research Center, 2001).
3. National estimates provided by Asia Pacific Consulting; for estimates up to 2010 of national product use and use in four southern provinces see Sinopec, Zhongguo shiyou shichang xianzhuang ji xiangguan zhengce (The Current Situation in China's Oil Market and Related Policies) (Beijing: Sinopec Information Center, 1999); for a thorough exploration of the oil, gas and oil products market in China in 2000 see China National Petroleum Corporation (CNPC), 2000 nian zhongguo shiyou shichang fenxi baogao (In-Depth Analysis of China's Oil Market in 2000) (Beijing: CNPC Information Research Center, 2001).
4. Ronald Soligo and Amy Jaffe, 'China's Growing Energy Dependence: The Costs and Policy Implications of Supply Alternatives', working paper (Houston: Baker Institute for Public Policy, Rice University, April 1999), available online at http://www.bakerinstitute.org/
5. Ibid.
6. Following a 1998 restructuring, CNPC, previously largely an upstream oil and gas enterprise, and Sinopec, previously a refining and distribution enterprise, swapped upstream and downstream assets such that CNPC enjoys almost-exclusive exploration and production rights in the north-east, north and north-west, and Sinopec enjoys almost-exclusive distribution rights in the central, south and south-east. Through subsidiary enterprises such as Sinopec's China Star Petroleum Exploration Corporation, and various oilfield administrations and refineries, CNPC, Sinopec and CNOOC have footholds in the 'exclusive rights' territories of each other. Since 1998 all three have undergone semi-privatisation through the establishment of subsidiaries selling shares in Hong Kong, New York and Shanghai capital markets (CNPC's subsidiary is PetroChina). For a discussion of the restructuring see Steven W. Lewis, 'Privatizing China's State-Owned Oil Companies', working paper (Houston: Baker Institute for Public Policy, Rice University, April 1999), available online at http://www.bakerinstitute.org
7. A joint venture between Phillips Petroleum and CNOOC is developing the Penglai 19-3 oil field. The reserve potential of the field is estimated to be the equivalent of 500-800m barrels of oil. Production should total 35,000 b/d to 40,000 b/d by August 2002, rising to 65,000 b/d by 2005. CNOOC has said it plans to raise Bohai Sea crude output to 360,000 b/d by 2005. CNOOC is also planning to raise production at its wholly owned Suizhong 36-1 field, off China's northeast coast, to 69,000 b/d in the coming year. The field has only minimal production to date. Apache's Zhao Dong field will produce 25,000 b/d by the end of 2003. Kerr McGee and CNOOOC also have a new discovery at Caofeidian.
8. Petroleum Argus Newsletter, 18 June 2001, p. 10.
9. Energy Intelligence Group database, subscription service, www.energyintel.com
10. CNPC, Sinopec and CNOOC employ more than 2m employees, the majority of whom will lose their jobs under current downsizing plans. Restructuring, particularly further privatisation, is likely to proceed very slowly, however, because local governments and employees have a strong interest to work together in opposing central government and corporate headquarter plans made in Beijing: China has no national unemployment assistance, health-care or pension system, and so the cost of establishing a social welfare plan for energy sector employees must be borne by local governments.
11. The project would enhance gas movements that got a boost in 1997 with the completion of an 864km line from Erdos to Beijing, which currently carries 1bn cubic metres (bcm) of natural gas to the capital. The throughput of this latter pipeline is slated to increase to 3 bcm.
12. BP recently announced it was pulling out of bidding for the project, which will require billions of dollars in infrastructure investments to facilitate use of the gas in Shanghai. BP is already committed to building an LNG import terminal in southern China.
13. 'China's CNPC Leaps on to Global Oil Production Stage', Petroleum Intelligence Weekly, 9 June 1997, p. 3.
14. Erica Strecker Downs, 'China's Quest for Energy Security', (Santa Monica, CA: RAND, 2000), p. 14; 'Chinese Energy Majors in Long March Upstream', Petroleum Intelligence Weekly, 28 January 2002, p. 3
15. Erica Strecker Downs, 'China's Quest for Energy Security', (Santa Monica, CA: RAND, 2000), p. 14; 'Chinese Energy Majors in Long March Upstream', Petroleum Intelligence Weekly, 28 January 2002, p. 3
16. For a thorough description of China's cross-investment strategy in the Middle East see Xu, 'China and the Middle East: Cross Investment in the Energy Sector', Middle East Policy, vol. vii, no. 3, June 2000.
17. Ibid.
18. Ibid.
19. In late 2001, Saudi Aramco, the Saudi state oil company, ExxonMobil and Fujian Petrochemical Company signed an agreement for a joint feasibility study for a 250,000 b/d upgrading of the Fujian refinery. Saudi Arabia has also proposed to construct a 100,000 b/d refinery in Shandong province and is negotiating with Sinopec to expand the refinery at Maoming.
20. Total SA of France holds a 20% stake in West Pacific Petrochemical Company (WEPEC) for an investment in the refinery at Dalian. Exxon, ARCO and Caltex have also pursued downstream ventures in China. BP currently owns over 20% in the Zhenhai refinery. 19 See Xiaojie Xu, 'China and the Middle East: Cross Investment in the Energy Sector'; also Qiang Wu and Xuemei Xian, 'China's Energy Cooperation with the Middle East', Strategy and Management, no. 2, 1999, p. 51 (in Chinese), and others cited in Downs, 'China's Quest for Energy Security'.
21. Total SA of France holds a 20% stake in West Pacific Petrochemical Company (WEPEC) for an investment in the refinery at Dalian. Exxon, ARCO and Caltex have also pursued downstream ventures in China. BP currently owns over 20% in the Zhenhai refinery. 19 See Xiaojie Xu, 'China and the Middle East: Cross Investment in the Energy Sector'; also Qiang Wu and Xuemei Xian, 'China's Energy Cooperation with the Middle East', Strategy and Management, no. 2, 1999, p. 51 (in Chinese), and others cited in Downs, 'China's Quest for Energy Security'.
22. Total SA of France holds a 20% stake in West Pacific Petrochemical Company (WEPEC) for an investment in the refinery at Dalian. Exxon, ARCO and Caltex have also pursued downstream ventures in China. BP currently owns over 20% in the Zhenhai refinery. 19 See Xiaojie Xu, 'China and the Middle East: Cross Investment in the Energy Sector'; also Qiang Wu and Xuemei Xian, 'China's Energy Cooperation with the Middle East', Strategy and Management, no. 2, 1999, p. 51 (in Chinese), and others cited in Downs, 'China's Quest for Energy Security'.
23. Wu and Xian, 'China's Energy Cooperation with the Middle East'.
24. John Calabrese, 'China and the Persian Gulf: Energy and Security', Middle East Journal, vol. 52, no. 3, Summer 1998, pp. 351-366; and Sergei Troush, 'China's Changing Oil Strategy and Its Foreign Policy Implications', working paper (Washington DC: Center for Northeast Asian Policy Studies, Brookings Institution, Fall 1999) available at http://www.brook.edu/neasia/papers/1999%5Ftroush.htm
25. John Calabrese, 'China and the Persian Gulf: Energy and Security', Middle East Journal, vol. 52, no. 3, Summer 1998, pp. 351-366; and Sergei Troush, 'China's Changing Oil Strategy and Its Foreign Policy Implications', working paper (Washington DC: Center for Northeast Asian Policy Studies, Brookings Institution, Fall 1999) available at http://www.brook.edu/neasia/papers/1999%5Ftroush.htm
26. See data and discussion in Richard F. Grimmett, 'Conventional Arms Transfers to Developing Nations, 1993 to 2000', (Washington DC: Congressional Research Service, 16 August 2001), p. 58, available on the website of the Federation of American Scientists at http://www.fas.org/asmp/resources/govern/crs2000.pdf.
27. Calabrese, 'China and the Persian Gulf: Energy and Security'.
28. Ibid.
29. Interviews with Saudi oil industry analysts in December 2001.
30. Interviews with CNPC officials in 2001.
31. See table provided by Asia Pacific Consulting in Soligo and Jaffe, 'China's Growing Energy Dependence: The Costs and Policy Implications of Supply Alternatives'.
32. Evan Feigenbaum. 'China's Military Posture and the New Economic Geopolitics', Survival, vol. 41, no. 2, Summer 1999, pp. 71-88.
33. James Hsiung, 'China's Omni-Directional Diplomacy', Asian Survey, vol. 35, no. 6, June 1995, pp. 573-586.
34. 'Russia to China Race', World Gas Intelligence, 22 August 2001, vol. XII no. 24, p. 1; and 'Russia Reaches for Chinese Oil and Gas Outlets', Petroleum Intelligence Weekly, 23 July 2001, p. 4.
35. 'Russia to China Race', World Gas Intelligence, 22 August 2001, vol. XII no. 24, p. 1; and 'Russia Reaches for Chinese Oil and Gas Outlets', Petroleum Intelligence Weekly, 23 July 2001, p. 4.
36. Xiaojie Xu, 'The Oil and Gas Links between Central Asia and China: A Geopolitical Perspective', OPEC Review, March 1999.
37. For more detailed analysis of the costs involved, see Soligo and Jaffe, 'China's Growing Energy Dependence: The Costs and Policy Implications of Supply Alternatives'.
38. 'CNPC Shelves China-Kazakhstan Oil Pipeline', Oil and Gas Journal, 30 August 1999, p. 44; and Quan Lan, 'Transnational oil pipeline shelved', China Oil, Gas and Petrochemicals, vol. 7, no. 16, 15 August 1999, p. 2.
39. 'CNPC Shelves China-Kazakhstan Oil Pipeline', Oil and Gas Journal, 30 August 1999, p. 44; and Quan Lan, 'Transnational oil pipeline shelved', China Oil, Gas and Petrochemicals, vol. 7, no. 16, 15 August 1999, p. 2.
40. Downs, 'China's Quest for Energy Security', p. 28.
41. Tony Walker and Robert Corzine, 'China Buys $4.3bn Kazak Oil Stake', Financial Times, 5 June 1997, p.9.
42. Amy Myers Jaffe and Martha Brill Olcott, 'The Geopolitics of Caspian Energy', in Yelena Kalyuzhnova and Dov Lynch (eds), The Euro-Asian World: A period of Transition, (London: Macmillan Press, 2000).
43. Rajan Menon, 'Treacherous Terrain: The Political and Security Dimensions of Energy Development in the Caspian Sea Zone', Analysis, the National Bureau of Asian Research, vol. 9, no. 1, 1998, p. 10.
44. 'Central Asia: China's Strike', The Economist, 16 August 1997, p.32.
45. Justin Jon Rudelson, Oasis Identities: Uighur Nationalism Along China's Silk Road (New York: Columbia University Press, 1998).
46. Dru Gladney, 'China's Interest in Central Asia', in Robert Ebel and Rajan Menon (eds), Energy and Conflict in Central Asia and the Caucasus (Oxford, UK: Roman & Littlefield Publishers, 2000).
47. Systematic information is unavailable, but see recent reports by observers, such as Norman Webster, 'Simmering Discontent: Beijing Continues to Repress any Sign of Islamic Nationalism in Its West', The Gazette (Montreal), p. B7, 13 October 2001, and Vivien Pik-Kwan Chan, 'Mosque Leaders' 'Re-Education' Campaign Stepped Up', South China Morning Post, Business Post supplement, 14 November 2001.
48. Systematic information is unavailable, but see recent reports by observers, such as Norman Webster, 'Simmering Discontent: Beijing Continues to Repress any Sign of Islamic Nationalism in Its West', The Gazette (Montreal), p. B7, 13 October 2001, and Vivien Pik-Kwan Chan, 'Mosque Leaders' 'Re-Education' Campaign Stepped Up', South China Morning Post, Business Post supplement, 14 November 2001.
49. Reported from a sermon in Riyadh in September 1998, as published in 'The Sino-Saudi Energy Rapprochement: Implications for US National Security', Nawaf Obaid, Amy Jaffe, Edward Morse, Chad Garcia and Kirk Bromley, US Department of Defense, Office of Net Assessment, Office of the Secretary of Defense, forthcoming, February 2002.
50. Interview, Riyadh,15 July 1998, ibid.
51. Interview in Beijing with the BBC World Service, aired 29 December 2001.
52. Yishan Xia, 'Woguo nengyuan xingshi ji zhanlue zhi wo jian' ('My View on China's Energy Situation and Energy Strategy'), Renmin Ribao (People's Daily), 10 August 2001, p. 7. (English translation from FBIS-CHI-2001-0810).
53. CNPC's ambitious 1997 development plans included Argentina, Canada, Colombia, Ecuador, Egypt, Indonesia, Kazakhstan, Kuwait, Mexico, Pakistan, Peru, Russia, Sudan, Thailand, United States and Venezuela; see 'China Wins Sudan Oilfield Project Bid', Xinhua in English, 31 January 1997, in FBIS-CHI-97-022; information on revised plans from interviews with CNPC officials in 2001.
54. 'CPECC Completes Oilfield Project in Sudan', Xinhua in English, 24 July 1999, in FBIS-CHI-1999-0724.
55. GWDC marketing brochure, 1998, cited in Xu, 'The Oil and Gas Links between Central Asia and China: A Geopolitical Perspective'.
56. Interviews with CNPC officials in 2001.
57. For a discussion of China's gradual, reluctant acceptance of the UN and other international organisations as useful forums for the pursuit of its own political and economic agendas in foreign policy, see Robert Boardman, Post-Socialist World Orders (New York: St. Martin's Press, 1994); for its changing attitudes toward the UN in light of the Gulf War see Yitzhak Shichor, 'China and the Role of the United Nations in the Middle East', Asian Survey, vol. 31, no. 3, 1991, pp. 255-269.
58. For a discussion of China's gradual, reluctant acceptance of the UN and other international organisations as useful forums for the pursuit of its own political and economic agendas in foreign policy, see Robert Boardman, Post-Socialist World Orders (New York: St. Martin's Press, 1994); for its changing attitudes toward the UN in light of the Gulf War see Yitzhak Shichor, 'China and the Role of the United Nations in the Middle East', Asian Survey, vol. 31, no. 3, 1991, pp. 255-269.
59. For a discussion of how China has used development aid in African states to gain formal political recognition see Deborah Brautigam, Chinese Aid and African Development (New York: St. Martin's Press, 1998).
60. For the politics of switching recognition in Africa see Richard J. Payne and Cassandra R. Veney, 'China's Post-Cold War African Policy', Asian Survey, vol. 38, no. 9, 1998, pp. 867-879.
61. See data and discussion in Richard F. Grimmett, 'Conventional Arms Transfers to Developing Nations, 1993 to 2000'; for a discussion of the changing goals of China's arms sales and a list of sales to individual countries see Daniel L. Byman and Roger Cliff, 'China's Arms Sales: Motivations and Implications' (Santa Monica, CA: RAND, 1999).
62. See data and discussion in Richard F. Grimmett, 'Conventional Arms Transfers to Developing Nations, 1993 to 2000'; for a discussion of the changing goals of China's arms sales and a list of sales to individual countries see Daniel L. Byman and Roger Cliff, 'China's Arms Sales: Motivations and Implications' (Santa Monica, CA: RAND, 1999).