Foreign media
2005-04-20
 



       BEIJING-China's private entrepreneurs are joining its big companies in striking abroad to search for oil to satisfy their nation's insatiable thirst, in the latest sign of how the world's fastest-growing major economy is roiling energy markets.


       Perhaps the most successful of this new breed of wealthy Chinese wildcatter is Ni Zhaoxing, a 50-year-old businessman who has spent the last year prospecting for oil in western Canada after amassing a fortune in China's real-estate market. Mr. Ni's ZhongRong Group has struck oil in its Saskatchewan field.

       China has been encouraging its big state oil companies to go abroad for years, aware that domestic oil fields don't have enough supply to meet growing demand in China. Government-run companies including China National Petroleum Corp. and Cnooc Ltd. have bought oil and gas fields in Central Asia, Africa and the Americas.

       That push-often into countries such as Sudan or Iran that have troubled ties with the U.S.-coupled with China's stated aim of improving its ability to use armed force abroad to protect its global interests, has raised alarms in Washington and other capitals. Western politicians and oil executives worry that Asia's state-owned oil companies are trying to lock up the world's resources in a bid to boost their nation's energy security. Some analysts counter that Chinese oil companies are actually spending only a fraction of what their western peers are in acquiring overseas oil fields.
       Mr. Ni's efforts are incidental by the standards of those giants and their foreign Big Oil counterparts. But even in its early stages, the emergence of private-sector oil developers in China's state-dominated industry illustrates both the country's growing obsession with energy and the rise of its entrepreneurial class. It also shows how, amid today's high oil prices and tight supplies around the world, even small-time players with no experience or expertise believe the search for oil can be lucrative.


       China has become more dependent on energy exports amid rapid industrialization and the rise of a middle class snapping up cars, as well as flat-lining production from its domestic oil fields. Its demand for oil is expected to reach 7.4 million barrels a day in 2007, up from 7 million barrels in 2006 and 35% ahead of the 5.5 million barrels in 2003.But its domestic supply this year is expected to be just 3.7 million barrels a day, only slightly more than the 3.4 million barrels a day it pumped out in 2003.
       Private Chinese companies are looking well beyond Canada to fill the gap, to places such as Indonesia and Ecuador. In April, 40 such companies traveled to Pakistan and signed deals to develop oil fields, refineries, pipelines and coal mines worth a total of more than 10 billion yuan ($1.28 billion), according to the All-China Federation of Industry and Commerce.

       ZhongRong eventually prevailed, and in 2005 began buying Saskatchewan tracts that totaled 15,000 hectares.

       Trevor Dark, assistant deputy minister of petroleum and natural gas at Saskatchewan Industry and Resources, says ZhongRong's subsidiary has licenses to drill six wells over a 12-month period in the Weyburn region. Canada Capital Energy Corp., the ZhongRong subsidiary set up for the project, says it has found oil in two wells so far, but has not said how much they are producing. The company says its goal is to reach a production rate of 20,000 barrels a day in five years.

       Mr. Ni's reception has been better. “We're very pleased,” says Mr. Dark. “We're absolutely happy for more firms from China to invest in Saskatchewan.”

       Mr. Ni says China's growing oil demand has fueled the soaring prices that attracted him to the business. But he says his investment has nothing to do with China's political agenda, or an effort to secure resources for the motherland. “I'm an investor,” he says. “Not just a Chinese investor. I'll sell the oil where I find it.”

 
 
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