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Posted: 8/25/2005 1:56:17 AM EDT
Beijing's Great Game
Published: August 24 2005 03:00 | Last updated: August 24 2005 03:00 lhttp://news.ft.com/cms/s/fe0674ce-143b-11da-af53-00000e2511c8.html This week's $4.18bn (£2.3bn) bid by state-owned China National Petroleum Corp (CNPC) for PetroKazakhstan, the Canada-based central Asian oil group, helps to illustrate two important truths about the world energy business today. First, China's eagerness to buy access to foreign oil and gas for its growing economy has not been in any way diminished by the failure of CNOOC's financially and politically more ambitious bid for Unocal of the US. Second, Washington has yet to come to terms with China's emergence as a big energy importer in competition with the US and other consumers. If the CNPC bid succeeds - and a consortium including Oil and Natural Gas Corp of India, another big economy increasingly dependent on imports, may yet launch a counterbid - it would be the biggest foreign takeover to date by a Chinese company. Analysts suggest CNPC is overpaying and say that Kazakhstan, under the authoritarian rule of Nursultan Nazarbayev, is a political minefield for any foreign oil company. But the deal is consistent with the Chinese strategy of trying to buy oil and gas assets wherever they can be found, from Gabon and Sudan in Africa to Iran and Russia in Eurasia. The former Soviet republic of KazakhÂÂstan, furthermore, has a long border with China. Geography dictates that the central Asian states will be of as much interest to China as they are to Russia. It is inevitable that Beijing will be an enthusiastic player in the new Great Game over the region's reserves of oil and gas. In the US, the Bush administration is watching these developments with alarm. With breathtaking hypocrisy, US officials criticise China's ties with energy-rich regimes, including those of Islam Karimov in Uzbekistan and Hugo Chávez in Venezuela. "The Chinese, even if they procured all the Unocals and forged relations with all the Chávezes, would still fall short of what they need for energy," one senior US official told the FT. "China will not solve its problems by dealing with unsavoury regimes." This is an odd analysis of China's energy ambitions, on several counts. For a start, China almost certainly will solve its energy problems by dealing with unsavoury governments, especially as they include Iran. The US itself hardly has an exemplary record in ethical oil procurement - Saudi Arabia and Angola spring to mind - and allowed CNOOC's bid for the respectably western Unocal to be scuppered by a protectionist Congress; Washington cannot complain if Chinese companies buy where they can. US officials are right to declare that Chinese policy on energy and foreign affairs should ideally be based on morality and justice. The vital business of oil procurement, however, is the last place to look for such a change of heart. And the west has barely begun to set a good example. China is back at it again trying to buy up more oil. 
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