Monday, August 15, 2005



For an interesting perspective on Iraq and Iran, look at it through China's eyes. They had been working for years to establish strong ties with Iraq to get access to their oil. Establishing access to oil has been part of their long term China oil strategy.

This quote pretty much sums it up:

"With so much competition for assets, China has pursued deals with international pariah states that are off-limits to Western oil companies because of sanctions, security concerns or the threat of bad publicity. CNPC is the largest shareholder in a consortium running much of the oil patch in Sudan, a country accused by the US of genocide in its western region of Darfur. Last year, China signed a US$70 billion oil and gas purchase agreement with Iran, undercutting efforts by the United States and Europe to isolate Teheran and force it to give up plans for nuclear weapons. If CNOOC acquires Unocal, it would have gas fields and a pipeline in Burma, whose operation by the US company has been criticized by human-rights groups.


``No matter if it's a rogue's oil or a friend's oil, we don't care,'' said an energy adviser to the central government who spoke on the condition he not be identified, citing the threat of government disciplinary action. ``Human rights? We don't care. We care about oil. Whether Iran would have nuclear weapons or not is not our business. America cares, but Iran is not our neighbor. Anyone who helps China with energy is a friend.''

Pretty tough talk on preserving China's access to oil... sounds just like the Carter & Bush doctrine that access to oil is in the vital interest of the USA. What's good for the US must be good for China too, right?

China is so different econmonically from the US that it pays to consider how they sell & distribute gasoline. It is allocated using rationing coupons. "Sinopec is the largest oil retailer on the mainland. It operates 30,164 petrol stations across the country while its rival, PetroChina, runs 17,403. And in many provinces, Sinopec in fact monopolizes the market.
This leaves consumers no other choice but to buy the coupons if they want to use Sinopec Group's services. Lack of competition, harking back to the old socialist days, maintains this vestigial system. However, sharply fluctuating international energy prices are motivating Sinopec to finally scrap the coupon system - but, again, in an apparent desire to safeguard its own interests."

"despite fundamental changes in the Chinese economy and society over more than the past two decades, Sinopec Group has continued to issue the [gasoline] coupons and its stations only accept such coupons as payment for fuel.
The only difference is that the coupons are no longer allocated by the government, according to budget needs. Instead customers must pay cash to buy them beforehand."

Things are changing fast though in China's energy policy. This just in: China Raises Taxes on Oil and Gas:

"China has increased its resource taxes for crude oil and natural gas for the first time since 1993 to standardize the taxation system and keep up with rising oil prices.
China raised the tax rate for oil at least 75 percent and for gas by at least three times, the State Administration of Taxation said Tuesday.
The rates apply to oil and gas explored and produced locally from July 1. The new rate for domestic firms is between 14 and 30 yuan (HK$13.40 and HK$28.75) for a tonne of oil, and between seven and 15 yuan for a thousand cubic meters of gas"

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