Posted on 07/06/2004 8:31:19 PM PDT by hedgetrimmer
Shanghai. (Interfax-China) - The leaders of China's three largest state-owned oil companies, the China National Petroleum Corp. (CNPC), the China Petrochemicals Corp. (Sinopec Group) and the China National Offshore Oil Corp. (CNOOC), met face to face in Beijing last week to discuss topics ranging from enhancing corporate competitiveness to strengthening communications, according to an official announcement by the three companies.
The three have long been at odds with each other, despite the fact that they are all government-owned. Rivalry has been particularly intense between CNPC and Sinopec in the downstream wholesale and retail market where the two together own half of the total gas stations in China. In some regions, staff have been accused of sabotaging rival facilities. Furthermore, a high-ranking official with a foreign petrochemical company investing in China has told Interfax that the relationship between Sinopec and CNPC is so poor that they are often unwilling even to enter negotiations with each other.
According to local press reports, the rare assembly of the three oil heads was arranged by the government. A major reform of the domestic oil products pricing mechanism is being considered by the central government planning body, the National Development and Reform Commission (NDRC), and the opinions of the oil companies were reportedly sought at last week's meeting.
CNPC's official spokesman Xu Yongfa denied to Interfax that there was a connection between the meeting and the government's efforts to gather opinions about price reform. He stressed that the senior officials of the three companies should meet from time to time in the future so as to "boost communication".
Those at last week's meeting included the president of CNPC Chen Geng and the president of CNPC's listed vehicle, PetroChina, Jiang Jiemin. From Sinopec, the president of the Sinopec Group Chen Tonghai, and the president of Sinopec Corp. Wang Jiming were in attendance. From CNOOC came the president Fu Chengyu and his counterpart from the listed CNOOC Ltd., Zhou Shouwei.
China is only five months away from officially opening its oil retail market to foreign investors, as stipulated in its agreement with the World Trade Organization. However, a government-dictated price mechanism still determines domestic pump prices.
Some interesting related news:
Japan checks on China's offshore project
Tokyo, Japan, Jun. 23 (UPI) -- A Japanese minister inspected a Chinese offshore natural gas project from the air Wednesday to determine if the project extends into Japanese waters.
Shoichi Nakagawa, minister of economy, trade and industry, flew to the East China Sea aboard a Coast Guard aircraft, in the first ministerial inspection of the area.
He was to observe whether Chinese companies working on the Chunxiao natural gas project are drilling within the borders of Japan's exclusive economic zone. China does not acknowledge the boundary.
http://www.washtimes.com/upi-breaking/20040623-033405-7700r.htm
China infringes Japanese sovereignty to drill for oil, they are about to sell oil on the world retail market per the WTO and Shell and Unocal are providing the expertise to the state-owned chinese oil companies to do it.
We are feeding the behemoth, it would seem.
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China gravely concerned about Japan's gas survey of disputed East China Sea area
Shanghai. (Interfax-China) - A spokesperson of China's Foreign Ministry voiced serious concerns about Japan's plan to conduct gas survey activities in disputed areas of the East China Sea on Thursday, and cautioned the Japanese government to "act with caution".
"China has always believed that the related issues should be resolved through negotiation," said the Foreign Ministry spokeswoman Zhang Qiyue.
"We hope Japan will use the maintenance of ties between the two countries and the stability of the East China Sea as its starting point, that they will act with caution, and especially, that they will not take any actions that would infringe on Chinese interests and complicate the issues," Zhang said.
Japan openly acknowledged this week that marine survey ships would be sent to its side of the Sino-Japanese dividing line in the East China Sea in early July. The decision has invoked strong protests from China, which has long argued against drawing a meridian line in the East China Sea as the border separating the territorial waters of the two countries. It also believes that the decision by Japan was made in preparation for gas exploitation in the area.
Since last year, China's two state oil companies have been joined by Shell and Unocal in the development of the Chunxiao Gas Field, which lies about 350 km east of Ningbo in the East China Sea. Tokyo suggested in the foreign ministers' meeting of the Asian Cooperation Dialogue this month that the project might violate Japanese sovereignty in the East China Sea.
There has since been an escalation of response from the Japanese side. According to the Chinese news agency Xinhua, the Japanese Minister of Economy, Trade and Industry, Shoichi Nagakawa, took a helicopter trip over the Chunxiao Gas Field last week to see for himself whether the project violates Japanese interests there. The trip was also aimed at understanding the facilities and type of boats used by China for the gas project.
China has always advocated delimiting the East China Sea according to the contours of the continental shelf, which will give it a larger Exclusive Economic Zone than Japan.
The China National Offshore Oil Corp. (CNOOC), the operator of the Chunxiao Gas Field, insisted in an interview last week that the project lies within the Chinese boundary.
Dispute over the Chunxiao project is the latest flare-up in a long territorial row between China and Japan in the East China Sea. The Chinese Foreign Ministry warned Japan in April not to step up the police guard over the Diaoyu (Senkaku) Islands, which are located in the disputed area.
It looks as if the Dragon is beginning to flex his muscles. He thirsts for oil, and Japan is faced with veiled threats if they get in the way.
As you pointed out, we fed this monster. What shall we do as his appetite grows larger than our ability to feed it?
Most of the articles don't say this, but I think China's efforts are most interesting in light of the fact that their state-owned oil companies will be able to sell on the retail market in 5 months. They obviously will be able to sell it for more money than in their domestic market. The trade deficit with China is going to become more monsterous.
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The Chinese government signed contracts with oil development companies in China and other countries including Britain and the US, in August 2003, without informing Japan of its plans. China then suggested that the two countries jointly develop the field, but Japan rebuffed the offer, pointing out that the project was already near completion. Japan says China has repeatedly failed to provide it with information regarding the development in the disputed area, despite numerous requests.
It is a dispute that threatens to undermine Japan's policy of diversifying energy sources. The country is already the world's leading importer of liquefied natural gas (LNG), which accounts for about 13 per cent of the country's energy needs.
Meanwhile, oil consumption in China is expected to more than double to 590m tonnes in 2020, up from 220m tonnes in 2000, according to the Institute of Energy Economics in Japan, a think-tank. China is expected to become a net importer of natural gas by 2010, reflecting its determination to reduce its dependence on coal.
To speed up the transition, China has drawn up plans to build three LNG import terminals, and will most likely increase that number to four or five in the near future.
China and Japan also disagree over the development of apipeline transporting gas from Sakhalin, the Russian island 26 miles north of Japan. China has proposed stretching the pipeline inland to Daqing, while Japan is seeking an extension to Nakhodka, a port city that faces the Japan Sea.
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1087373539390
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