China oil quest unlikely to dilute supply-experts
Some U.S. policymakers are concerned that China's pursuit of oil stakes in Venezuela, Canada and Iran could spur tighter markets as prices linger near $54 per barrel, just short of the record-high of $57.60 set by U.S. light crude oil March 17.
Guy Caruso, head of the U.S. Energy Information Administration, said such concerns are "probably overblown," and that China will only get a relatively small amount of its total supply from overseas projects.
"I'm not worried that (China) will somehow edge out investment dollars" from other international oil companies, Caruso said at a conference at the Center for Strategic and International Studies on China oil demand.
Rampant oil demand from China, the world's second-largest consumer behind the United States, caught oil market analysts off guard in 2004.
Chinese oil demand, pegged at 6.4 million bpd last year, is forecast by the International Energy Agency to grow 7.9 percent this year, down from 15.6 percent a year ago.
Chinese oil firms like CNOOC Ltd., China National Petroleum Corp. and Sinopec Group have pursued projects in Canada, Venezuela and elsewhere, venturing to nations like Iran and Sudan that are off-limits to U.S. majors because of government sanctions.
Such companies will likely continue their global energy quest even though they will likely rack up billion-dollar losses in the process, said Jeffrey Logan, a China expert at the International Energy Agency.
"It's not like the Chinese will strangle-hold the market," Logan said. "They have a limited amount of influence and have to spend a tremendous amount of money to get it."
Equity oil projects in Sudan and elsewhere, where Chinese firms take a percentage of a field's production as payment, account for about 350,000 barrels per day, or 15 percent, of its imports.
If Chinese state-owned companies meet their goal of growing overseas equity shipments by 8 percent a year, they could control only 2 percent of global oil supply by 2020 at best, Logan said.
China is looking to use its $600 billion in foreign currency reserves for overseas ventures in oil, copper and other minerals rather than plowing them into overheated domestic markets where bad loans abound, Logan said.
It's unclear whether Chinese nationals will take to heart lessons learned by Japan's national oil firms, which lost billions of dollars pursuing global projects only to come up nearly empty-handed after two decades, he said.
Chinese planners will eventually realize that overseas equity oil ventures are "a very expensive way to do not very much at all," Logan said. ReutersMuzi.com News http://latelinenews.c
posted by Cyrus at Friday, March 25, 2005
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