China’s overseas upstream expansion is a learning curve for its national oil companies seeking to become international players, but is by no means a form of “colonial exploitation,” delegates at the World Petroleum Congress in Moscow were told.
Chen Weidong, senior economist of the Energy Economics Institute of China National Offshore Oil Corporation, defended China’s energy overseas expansion, dismissing the worries that China’s overseas acquisition is a new form of economic invasion.
“Chinese overseas investment has helped to develop local economies and create jobs in resource countries with no intention of any form of colonial (exploitation),” he said.
The Chinese upstream asset acquisition drive is simply part of an overall transformative process in the global energy industry, he said.
“The world has entered into a China-acquisition period,” Chen argued.
He said the US, Russia and China are the three countries that could most heavily influence a change of the world energy landscape.
The interaction among the three countries in the energy sector has led to the new evolution of energy geopolitics and vice versa, he said.
Chen said that from 2009 to 2013, three Chinese NOCs – China National Petroleum Corporation, Sinopec and China National Offshore Oil Corporation – spent $100 billion to acquire overseas upstream assets, about 10 times what ExxonMobil, Chevron and ConocoPhillips spent during the same period.
He said that Chinese companies had set foot in countries from which western majors have just withdrawn as a result of asset restructuring.
As a result, he said these investments have enabled China to produce about 2 million barrels of crude oil per day outside China, which is about equivalent China’s domestic production.
However, only about 10% of that volume is being shipped back for domestic consumption, China selling the rest on the international market.
Chen added that China now relies on imports to meet about 60% of domestic demand of 10 million bpd. The country is already the world’s top energy consumer and will soon become its number one crude importer, ahead of the US.
Between 2005 and 2010, Chen served as vice president of China Oilfield Service Ltd (COSL), which is CNOOC’s drilling and service contractor.