Is China's bid for an American oil mini-major just a reasonable business deal or a serious outbreak of energy insecurity in the country set to become the world's largest economy? In other words, has the final scramble for oil actually started?
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One thing is certain: the bid highlights the common desire of the US and China to achieve energy security. As present and future superpowers, they are reluctant to accept import dependence for so vital a commodity as oil.
In fact, Beijing is also trying to cut oil use, and has dispatched its oil companies far afield to find and produce new oil. But China's thirst for oil - helping drive the crude price over $60 a barrel - is such that it is now also trying to buy reserves on the stock market, as so many western majors have done in recent years. India shows signs of following the same energy security strategy. Both the new Asian giants stand in contrast to Japan.
n theory, it ought to be irrelevant which or how many sources of oil a country has, because all such sources effectively feed one big pool, the world market, from which everyone buys. In practice, and certainly in war, things are different. Big powers, such as Britain and the US in the last century, felt they needed their own oil to fuel their navies; the UK government once owned BP for this purpose and the US still has its Naval Petroleum Reserve in Alaska. Nowadays the connection is often reversed. The US feels it needs its navy to protect oil supplies and routes.
In general, owning foreign oil reserves does not increase energy security. Were CNOOC to win Unocal, it could not insist on shipping Unocal's US oil off to China; US law would prevent this. But there are two other possible ways of enhancing energy security. One is through long-term supply contracts, which existed in the energy-anxious 1970s and before the development of the oil futures markets. Opec producers now prefer to play the spot market for the highest price. But it is possible to imagine oil importers of the weight of China and India striking deals where smaller oil consumers could not. The second option is to build up an oil stockpile. China is doing this and India is talking about it.
In the end, the best energy security money can buy is: money. Oil will go to the highest bidder. When Ali Naimi, oil minister of Saudi Arabia, which holds the world's largest reserves, last year predicted that his country would be the one to produce the last barrel of oil on earth, he did not forecast the nationality of the buyer. But, on present trends, it could be Chinese.
