Race for oil

VIENNA (Austria) — Iran, Sudan, Venezuela, Syria — nations shunned by America as nuclear threats, insurgent havens or human rights violators — are increasingly being wooed by China and India in a race for oil and influence that is challenging Washington on the energy and security fronts.

By (AP)

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Published: Thu 21 Jul 2005, 10:25 AM

Last updated: Thu 2 Apr 2015, 4:43 PM

The most recent US concerns have focused on China's bid for Unocal Corporation, America's ninth largest oil company. American congressmen, senators and former CIA director James Woolsey have described it as a threat to the US national security.

But less high-profile manoeuvers by the two Asian powerhouses also are raising questions.

Besides their involvement in energy projects worth billions of dollars (euros) in countries America views with concern, India and China also have bought into Russia's oil and gas sector. And Beijing, with Moscow's apparent blessing, is reaching out to energy-rich former Soviet republics in central Asia.

As their outreach grows, the two countries are receiving increased attention in Washington.

US President George W. Bush this week said America's relationship with China is "a good relationship, but it's a complex relationship."

Bush also feted Indian Prime Minister Dr Manmohan Singh at the White House in clear recognition of that country's growing significance.

The all-out energy offensive by the two Asian powers was documented this year by the National Intelligence Council, the US government think tank which advises the Central Intelligence Agency and senior US policy-makers.

"The likely emergence of China and India as new major global players ... will transform the geopolitical landscape," said the report titled "Mapping the Global Future."

"In the same way that commentators refer to the 1900s as the 'American Century,' the early 21st century may be seen as the time when some in the developing world, led by India and China, come into their own."

The report also says energy demand through 2020, especially by India and China, "will have substantial impacts on geopolitical relations."

In Asia's former Soviet republics, such moves threaten to hurt US interests by skewing alliances in a key part of the world on the doorstep of the oil-rich Caspian basin and also close to Iraq and Afghanistan.

Strategic manoeuvering has always been a part of world rivalries and most nations aren't that choosy — Saudi Arabia, the world's largest oil producer, remains crucial to Washington. But the imperative of making friends with energy-rich nations has grown over the past two years as oil prices rise and consumption grows.

Much of the oil — a third of world output — still is pumped by the Vienna-based Organisation of Petroleum Exporting Countries, with Saudi Arabia as its powerhouse.

But billions of barrels of the world's reserves are in countries hostile to the United States such as Iran, Opec's second largest oil producer, where US sanctions have locked out American oil companies. Billions more are in countries and regions with uncertain loyalties.

These countries "are a magnet for oil-hungry countries," says Michael Klare, author of "Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency."

Chinese oil demand now is second only to America's and within 20 years is it is expected to increase to 21 million barrels a day. That's what America consumes now — and most of it will be imported. India's oil consumption over the same period is expected to double to a daily 5.3 million barrels — also mostly imported.

Klare says China's worries about American dominance in the Arabian Gulf, and the Straits of Hormuz through which the tankers pass, have hastened its scramble for oil rights elsewhere.

"Right now, they get most of their oil from the ... Gulf countries but they are fearful that if the US closes the Straits of Hormuz, then China would be starved of oil."

Beijing is also casting a wider oil net because the US presence in Iraq — thought to have the world's second-largest oil reserves — has derailed Chinese attempts to establish a toehold there.

Chinese and Indian investments in countries and regions of US concern include:

a 50-per cent Chinese stake in the sprawling Yadavaran oil fields of Iran, which the United States accuses of trying to make nuclear weapons. The Chinese last year also signed deals worth an estimated $70 billion for 250 million tons of Iranian liquefied natural gas;

majority Chinese control in the consortium dominating the oil industry of Sudan, which once sheltered Osama bin Laden and whose government is accused of human rights abuses linked to massacres in the Darfur conflict;

Chinese ownership of 60 per cent of a major Kazakhstan oil and gas enterprise and plans to build a pipeline for Kazakh crude into China;

India's multibillion dollar project to pipe in Iranian gas via Pakistan — a plan criticised this month by US Secretary of State Condoleezza Rice;

Billion-dollar investments by India's main oil and gas enterprise in far-flung projects that include Syria — accused by Washington of failing to prevent insurgents from crossing its border into Iraq and of suppressing democracy in Lebanon. India has also signed a pipeline deal with gas-rich Myanmar's hard-line military junta.

Chinese and Indian interest in Venezuela, the fourth largest US oil supplier, whose president, Hugo Chavez, is a fierce critic of US foreign policy. Chavez is trying to rewrite concessions to US oil companies and has invited China and India to participate in oil exploration.

Both Beijing and New Delhi deny that their efforts constitute a threat to the United States.

Alluding to concerns about Iran, the Chinese Foreign Ministry told The Associated Press that "China's development of friendly relations with another country ... won't harm any other country's interests." A ministry statement said Beijing is "devoted to developing constructive and cooperative relations with the United States."

And Sanjana Baru, media adviser to Indian Prime Minister Dr Manmohan Singh, says the pipeline is nothing more than a "bilateral issue between ... India and Iran."

Still, such alliances have already resulted in some US setbacks.

Washington is believed to have used its influence with Panama in past years to reduce Chinese access to the Panama Canal. But China last year signed a deal with Venezuela and neighbouring Colombia for a pipeline to bypass the Panama Canal and ship Venezuelan oil directly to Colombia's Pacific outlets for loading onto Chinese tankers.

Iran, whose nuclear ambitions are among Washington's greatest security concerns, also is reaping benefits beyond the cash and energy-related expertise provided by China and India.

Chinese sales of anti-ship missiles and other military hardware to Iran have been documented by the US authorities and international non-governmental agencies. They have also drawn repeated US sanctions — most recently last year against eight Chinese companies accused of selling missile technology to Teheran.

China, for its part, has hinted it would block any US-led attempt for UN Security Council sanctions on Iran over the nuclear issue, saying it "does not support referring the Iranian nuclear question to the Security Council."

Gary G. Sick, a member of the National Security Council under former President Jimmy Carter, says sanctions on Iran effectively means embargoing Iranian oil.

"The Chinese approving a resolution that imposes a sanction on (Iran's) oil — I don't see it happening," he says.

The likely emergence of China and India as new major global players ... will transform the geopolitical landscape

A report says energy demand through 2020, especially by India and China, "will have substantial impacts on geopolitical relations."

A third of world oil production is pumped by the Vienna-based Organisation of Petroleum Exporting Countries, with Saudi Arabia as its powerhouse.

Billions of barrels of the world's reserves are in countries hostile to the United States such as Iran where US sanctions have locked out American oil companies. Billions more are in countries and regions with uncertain loyalties.



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