Days before a Chinese firm announced a US$2.3 billion investment in a Nigerian oil field last month, Chinese President Hu Jintao (
China must create an "energy-efficient, environmentally friendly society," Hu said in a New Year's Day speech at a Communist Party reception, according to state media.
The twin announcements highlight the dual tracks of Beijing's energy policy as it tries to secure foreign oil and gas to fuel sizzling economic growth of more than 9 percent a year while struggling to limit its soaring reliance on them by increasing use of nuclear and hydroelectric power.
Of course, China is not alone in this predicament -- witness US President George W. Bush's plea to cut the US dependence on Mideast oil. But the voracious appetite for energy by China and other nations with fast developing economies, notably neighbor India, also is one factor propelling the upward trend in oil prices.
And some of China's energy deals are causing bumps on the world's political landscape. Its investments in Iran and Sudan have prompted complaints it is abetting pariah nations, and Chinese pursuit of deals in Canada and other US allies have been met with unease in Washington.
Last year, China's state-controlled CNOOC Ltd (
The energy buying spree has taken Chinese firms as far afield as Venezuela and Australia. In the past six months, these companies have signed deals totaling US$7 billion for stakes in oil fields in Kazakhstan, Nigeria and Syria. A state-controlled company is reportedly considering a US$2 billion bid for yet another Kazakh property.
"There is a strategic element to it," said Kevin Norrish, an energy analyst for Barclays Capital in London. "It's something that we've seen before. Japan was doing the same thing about 10 to 15 years ago, with a lot of its natural resource companies, including oil companies, buying into foreign projects."
China's oil firms began investing abroad in the late 1990s, after double-digit economic growth outstripped supplies from domestic fields that had met its needs for decades. Rising family incomes have led to an explosion in private car sales, while industry demands for plastics and other petrochemical products have soared.
Growing traffic has worsened eye-searing smog in Beijing and other cities, while Chinese leaders fret about depending on Middle Eastern oil that arrives by sea routes that they don't control.
In the latest round of deals, the biggest state-owned oil company, China National Petroleum Corp (
In a sign that Beijing plans still more acquisitions, it signed an agreement with India last month to share information on what they pay for foreign assets in an effort to avoid costly bidding wars.