China Has An Oil Plan

Courtesy of T. Boone Pickens, here is an in-depth look at China’s Oil Plan and the quiet moves they’ve been making to secure their own energy future.  I share this not to support Pickens Plan for American Energy Independence, but simply to show the steps China is making behind the scenes.  For whether you view them as our future adversary or partner, it’s good to know (in Picken’s  words) just what cards they are holding.

“America depends on a number of foreign countries for oil that don’t have our best interests at heart. Countries like Venezuela, Nigeria, Iraq, and Angola are either from unstable regions or actively adversarial to American interests. Oil prices have come down from a year ago, but even though our addiction to foreign oil is cheaper, it is still a very dangerous addiction from a national security standpoint.  Moreover, securing long term supplies of oil will never be as easy it has been in the past. There’s stiff competition for oil in the global marketplace, and China is beating us at this game.

Since the 2003 invasion of Iraq, China is aggressively seeking to secure oil resources for its growing economy. With their once lucrative oil contracts voided by the overthrow of Saddam Hussein, the Chinese have used lower oil prices during this global recession to embark on a resource grab of epic proportions. Maximizing the collective strength of China’s banking institutions and the diplomatic resources of the Chinese government, China’s state owned oil companies are positioning themselves to control a substantial amount of the oil produced in Africa, Asia and South America.

Whether through preferential bank loans to ailing countries or major investments in international oil companies on the open market, one thing has become clear: China is making sure that they have the oil they need in this limited resource market.

  • Since December 1st, 2007, China has spent approximately $236 Billion on oil purchase and “Loan for Energy” Deals to secure future Oil Production?
  • These contracts have the potential to deliver over 7.8 Billion Barrels of Oil to China?
  • China has bid to purchase or bought large shares of stakes in over 22 International Oil Exploration and Production companies.
Here is what China has done so far.

(All totals in Billions of US Dollars)

Country Company Loans Purchases Infrastructure Options Total
  Devon   0.51     0.51
  Addax   7.19     7.19
Algeria PTTEP   ?      
Angola Sonagol   2.46     2.46
Argentina Bridas   3.1     3.1
Argentina YPF   17     17
Australia ExxonMobil *   46     46
Australia Puffin and Talbot   .56     .56
Brazil Statoil   3.07     3.07
Brazil Petrobras 10       10
Canada Pennwest   0.82     0.82
Canada Syncrude   4.65     4.65
Canada AOSC   4.65     4.65
Costa Rica Recope     .7   .7
Ecuador   1 1 2   4
Iran       2 100** 2
Iraq       3   3
Japan Nippon Oil   ?      
Kazakhstan JSC KMG   3.30     3.30
Myanmar       2.5   2.5
Nigeria NNP     23   23
Norway Awilco   2.5     2.5
Papua New Guinea InterOil   .5     .5
Russia Lukoil 25       25
Russia   10       10
Singapore SPC   1.02     1.02
Syria Shell   1.5     1.5
Syria Tanganyika   2     2
Turkmenistan   3       3
Ugunda Tullow Oil   3.8     3.8
Venezuela PDVSA 20       20
Venezuela PDVSA   16     16
Yemen SOCO Yemen   .47     .47
Total   69 122.09 45.20   236.29
Potential Total   69 122.09 45.20 100** 336.29**
Showing 1 to 33 of 33 entries

? ~ Terms not disclosed * – LNG contract deal ** ~ Provisional Purchasing Right All totals sourced from Bloomberg News

    China / Devon

  • CNOOC has paid $0.51 billion for a 24.5% share of a block being developed by Devon in the South China Sea.
  • Angola / Sonagol

  • Sinopec has paid $2.46bn for a 55% stake in Angola Block 18.
  • Production is expected to yield 75,500 bpd.
  • Argentina / Bridas Corp.

  • CNOOC will pay $3.1 billion for a 50% stake in Bridas.
  • Bridas’ development holdings include offshore acreage in Argentina, Bolivia and Chile.
  • CNOOC expects this to add 46,000 BOPD.
  • Uganda / Tullow Oil

  • CNOOC will pay $3.8 billion for a 1/3 stake in Tullow’s Ugandan tracts.
    Algeria / PTTEP

  • CNOOC and PTTEP’s JV won the rights to Algeria’s Hassi Bir Rekaiz field.
  • The JV is 50/50, but terms were not published.
  • Kazakhstan / JSC KMG

  • CIC has paid $.939 bn for 11% of JSC KMG on the London exchange.
  • CNPC loaned JSC KMG $5bn in April of this year.
  • Venezuela / PDVSA

  • An unnamed Chinese company is to invest $16 bn.
  • This investment is over a 3-year timeframe to develop the Junin 6 field.
  • Chavez is looking to increase production to 900,000 bpd.
  • Australia / ExxonMobil

  • Exxon and PetroChina has agreed on a $41 bn LNG contract.
  • The Gorgon sales contract is projected to be 2.25 million tons per year for 20 years.
  • Canada / Penn West

  • Penn West and CIC have signed a deal for $817 million to develop Peace River in Alberta.
  • The deal allows CIC a 45% stake in the oil sands development.
  • Canada / Athabasca Oil Sands Corp.

  • PetroChina will buy a majority stake in the company for $1.9 bn.
  • They will own 60% WI in the Mac Kay River and Dover projects.
  • Estimated 150,000 bpd by 2014.
  • Turkmenistan

  • Secured a deal to buy 40 billion cubic meters of natural gas annually.
  • Completion of the 7,000-kilometer line is expected by year end.
  • China has promised Turkmenistan’s gas company a $4 billion loan.
  • Prior, China signed a $10bn “loan-for-energy” April agreement.
  • Costa Rica / Recope

  • CNPC and Costa Rica signed a JV to build a $1bn refinery in Costa Rica.
  • It will increase Costa Rica’s refining capacity to 60,000 bpd from 18,000 bpd.
  • The Puerto Moin refinery is to be completed by 2013.
  • Argentina / YPF

  • CNPC will pay up to $17 bn for 75% of YPF.
  • YPF holds +50% of Argentina’s refining capacity and ~40%of its oil output.
  • YPF holds rights to 21 exploration blocks and 92 production blocks.
  • YPF owns 1,678 service stations in Argentina.
  • Papua New Guinea / InterOil

  • CNOOC and Petro China agreed to bid for InterOil’s NG project.
  • The project could be worth up to $500 million.
  • Ecuador

  • PetroChina is offering $1bn for 96,000 bpd for 2 years.
  • Sinohydro is bidding with Ecuador to build a $2 billion hydroelectric dam.
  • Ecuador is in talks with China about former US Army Manta air base.
  • The government is also negotiating a separate $1 bn four-year loan with China.
  • Iraq

  • CNPC wins the rights to develop the Rumaila field.
  • Production rights of the 17 BBL is estimated to be worth $30 bn to China.
  • CNPC signed a 2008 contract worth up to $3 bn to develop the Ahdab field.
  • Addax Petroleum

  • Sinopec Group agreed to acquire Addax Petroleum Corp. for $7.19 bn.
  • Addax is in top 5 independent producers in W. Africa and the ME by volume.
  • Produced 136,500 bpd on average last year.
  • Addax contracts with Kurdish autonomous region in Iraq.
  • Iraqi Provisional Government considers these contracts illegal.
  • Singapore / Singapore Petro Co.

  • Petro China has acquired a 45.5% in Singapore Petroleum Co. for $1.02 bn.
  • Singapore Petroleum’s main asset is a refining facility.
  • They also gain shares in Keppel, the worlds largest producer of off shore rigs.
    Russia

  • China loaned $10 bn to Rosneft and Transneft at 6%.
  • In return, Moscow agreed to supply 301,000 bpd at a discount.
  • Agreement is for 20 yrs.
  • Russia / Lukoil

  • LukOil has agreed to send Sinopec 21 MMBO over the next 3 yrs.
  • The oil is from the South Khylchuyu field. Terms not disclosed.
  • LukOil has agreed to send 300 million tons of crude to China, via pipeline, for a long term $25 Billion long term loan.
  • Japan / Nippon Oil

  • PetroChina acquired 49% of Nippon Oil’s largest refinery.
  • The Osaka refinery has a capacity of 115,000 bpd.
  • Brazil / Statoil

  • Sinochem has paid $3.07 billion for a 40% stake in Statoil’s offshore Brazil field.
  • Statoil will still operate.
  • Brazil / Petrobras

  • China agreed to lend $10 billion to Brazil’s Petrobras.
  • In exchange, Petrobras will supply China with crude oil for 10 years.
  • Starting at 150,000 bpd in 2009 and up to 200,000 bpd after 2010.
  • Petrobras and Sinopec also agreed to future E & P agreement.
  • Russia China loaned $10 bn to Rosneft and Transneft at 6%.
  • In return, Moscow agreed to supply 301,000 bpd at a discount.
  • Agreement is for 20 yrs.
  • Venezeula / PDVSA

  • China is investing $12 bn in PDVSA.
  • The intention is to double the 500,000 bpd to China by 2012.
  • China will also help with E & P of the Orinoco Belt.
  • China will help build 4 tankers and 2 refineries.
  • Iran

  • Sinopec and Iran agreed to a $2 bn deal to develop the Yadavaran oil field.
  • China expects 85,000 bpd for 4 years and 100,000 bpd for 3 years after that.
  • In the deal, China can pay up to $100 bn over 25 yrs for a 51% stake in the field.
  • Potential LNG project mentioned, as well.
  • Norway / Awilco

  • China will pay $2.5 bn for Awilco Offshore ASA.
  • Awilco already has exploration in Australia, Saudi Arabia and the Mediterranean.
  • Syria

  • CNPC has paid $1.5 billion for a 35% stake in Syria Shell Petroleum Development B.V.
  • Shell will still operate.
  • Syria / Tanganyika

  • Sinopec will pay $2 bn for Tanganyika.
  • The company has operating interest in Syria.
  • In 08, they averaged 16,700 bpd.
  • Australia / Puffin & Talbot

  • Sinopec has a new 60% stake in Puffin and Talbot for $559 mm.
  • Puffin & Talbot has been producing between 6,000 and 10,000 bpd.
  • Acquisition includes the AC/P22, AC/L6 and AC/RL1 permits of the Talbot field.
  • Yemen / SOCO Yemen

  • Sinochem buys SOCO Yemen for $465M.
  • SOCO Yemen holds 16.785% in the East Shabwa Development Area SOCO.
  • Yemen’s working interest is 6,341 bpd.
  • Nigeria / Nigerian NationalPetroleum

  • NNP and China State Construction Engineering have signed a deal to build a refinery for $23 billion.
  • Capacity is expected to add 750,000 b/pd.
  • Nigeria / NNPC

  • Cnooc has agreed to buy 45% of the OML 130 field for $2.3 bn.
  • OML 130 field covers almost 500 square miles.
  • Cnooc also is looking to buy OML 64 which was siezed from XOM and Chevron.
  • Myanmar

  • CNPC has paid $2.5 billion to construct a pipeline from the Myanmar port at Kyaukryu to the Chinese city of Ruili.
  • To read all about Pickens Plan for American Independence,  CLICK HERE.

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