- The Washington Times - Sunday, April 23, 2006

Chinese President Hu Jintao flew into an enthusiastic welcome in Saudi Arabia over the weekend to negotiate new oil supplies, safe in the knowledge that the closely controlled kingdom will not allow embarrassing protests like those he faced in the United States last week.

His three-day visit, aimed at improving relations between the world’s largest oil producer and its second-largest oil consumer, is the latest evidence that the battle for access to the world’s precious energy reserves has become the new “Great Game” of the 21st century.

Mr. Hu, busily working to “lock up” oil supplies with new ventures in the Middle East, Africa and Latin America, met on Saturday with King Abdullah, who three months ago became the first Saudi monarch to visit China.

The two signed energy and defense deals and discussed a plan to set up a Saudi-fed strategic oil reserve in a coastal city in southeast China, a Chinese official told Agence France-Presse yesterday.

On his way home from Washington, Mr. Hu also will visit Nigeria to discuss buying a stake in four offshore oil fields and a refinery.

Access to energy supplies has become a source of friction between Washington and Beijing, on top of testy relations over Taiwan, trade and human rights. And their competition for oil is fueling other, potentially explosive, international crises, as last week’s unproductive summit demonstrated.

Mr Hu nodded politely but gave no ground to pressure for sanctions against Sudan over atrocities in Darfur or Iran over its nuclear program. China has made big investments in both countries’ oil industries.

It was little wonder that Iranian President Mahmoud Ahmadinejad gloated over soaring crude prices on Friday. Oil is not only causing Americans economic pain; it is also bolstering Teheran’s prospects of escaping sanctions as both China and Russia, another significant investor, hold veto powers at the United Nations.

Chinese demand for oil overtook Japan’s in 2004 and, at 6.5 million barrels a day, it is now second only to America’s 20 million. China’s domestic oil production meets more than half its needs but, by Beijing’s own estimates, it will be able to supply less than a third of its predicted consumption of 600 million tons of crude annually by 2020.

The country’s leaders have been aggressively pursuing new sources of oil and gas since the fall of Saddam Hussein wiped out Chinese stakes in Iraqi oil fields. Since the 2003 war, the China National Petroleum Corp. (CNPC), the largest state-owned oil company, has signed 20 contracts to explore new fields or acquire existing operations in 12 countries, from Indonesia to Tunisia.

Closer to home, it has been vying with Japan for access to lucrative Russian oil fields in Siberia. In 2004 alone, it increased its overseas oil production by 20 percent and doubled its extraction of natural gas abroad.

Beijing’s newly cultivated energy alliances with leftist leaders in Latin America are causing further concern in Washington. Venezuela, which is the United States’ fourth-biggest oil supplier, sold only 12,300 barrels a day to China in 2004, but that figure will soar under new deals. Beijing is also expanding operations in Bolivia, where Venezuelan President Hugo Chavez’s ally, Evo Morales, became president in January, and Peru.

The week before Mr Hu’s visit to the United States, the assistant secretary of state responsible for Latin America, Thomas A. Shannon Jr., visited Beijing with a clear message to the Chinese to watch their step in the region.

The United States signaled its concern about China’s appetite for oil in a revised national security strategy document published last month and approved by Mr. Bush. China’s leaders, it said, are “acting as if they can somehow ‘lock up’ energy supplies around the world or seek to direct markets rather than opening them up.”

China counters angrily that the United States wants to establish “hegemony” over world oil supplies and blames what it calls Western government-backed, profit-seeking “international petroleum crocodiles” for manipulating oil prices.

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