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Cheap oil and geopolitics - Feb 23

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China Changes Calculus for Petro-Rulers

Steve LeVine, The Oil and the Glory blog
Much has been written on how low oil prices will help to reverse the fortunes of resource-strapped Big Oil – if not precisely jolly over their new penury, closed-armed petro-powers, it's said, will now allow western oil companies at least to make a case why they should be permitted to conduct exploration and production. Atop the list of this ostensible new state of affairs have been Venezuela, Libya, and Russia.

But so far, the opposite appears to be happening -- resource-rich countries are not opening up to new deals with western oil companies. One reason is that the analyses appear to have played down two factors – the depth of discomfort among the petro-powers with Big Oil; and the deep-pocketed willingness of China to step in.

The implications of China's entry as cash savior include not only trouble for non- state oil companies; it also could exaggerate an expected resumption of relatively high oil prices once the global economy recovers...
(23 February 2009)
Also posted at Business Week




China prepares to buy up foreign oil companies

Richard Spencer, The Daily Telegraph
This proposal may risk a backlash from countries who fear that China is using the world's economic crisis to tilt the balance of trade and diplomacy in its favour.

A conference of officials from the National Energy Administration has agreed to consider establishing a special fund for China's state-owned companies to buy oil and gas firms overseas. The beneficiaries would be the Beijing's three giant energy companies - Petrochina, Sinopec and CNOOC.

"Firms will be able to benefit from low-interest loans and, in some cases, direct capital injections," according to China Petroleum Daily.

This state money would be used to fund takeovers or mergers with resource companies abroad. Which foreign firms, if any, have been identified for takeover has not been disclosed. But the dramatic fall in oil prices since last summer, and the strains caused by recession, have driven down the share prices of many energy companies, making them more affordable targets for predatory competitors...
(22 February 2009)



China, Venezuela bolster 'strategic fund' for development

Eric Watkins, Oil & Gas Journal
Venezuelan President Hugo Chavez and Chinese Vice-President Xi Jinping have signed an agreement to increase to $12 billion an existing bilateral strategic fund for oil development.

According to Chavez, Beijing will contribute $8 billion and Caracas the remaining $4 billion to the fund, which aims largely to increase Venezuelan oil exports to China to 1 million b/d in 2015 from the current 350,000 b/d.

"We will meet that goal, without doubt," Chavez said over national television, while telling the Chinese delegation. "All the oil China needs for the next 200 years, it's here. It's in Venezuela," he said...
(20 February 2009)

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