China's quest for energy and Northeast Asian security

The Iraq conflict has China striving to secure reliable, long-term sources of foreign energy to reduce their dependence on Middle East oil fields. As the world's third largest oil consumer, China became a net importer of crude in 1993. The major energy players in China are negotiating contracts with overseas producers and financing new developments for crude oil and natural gas. For example, China signed a contract in June 2003 for the delivery of 30 metric tonnes of oil per year from Siberia. Military planning and politics play a major role in a country where oil giants are majority-owned by the state. Diversification of domestic energy supplies from crude to natural gas has slowly begun. Construction of a massive gas pipeline to supply Shanghai from the Tarim Basin began in July 2002. It is feared that this pipeline could become a target for terrorists. Agreements for building terminals along the southeast coast to receive shipments of liquid natural gas (LNG) and ethylene from foreign suppliers were recently signed. Keeping shipping lanes safe from Indonesia and Australia will require cooperation from China's neighbours. Oil and gas markets in China are being opened according to World Trade Organization requirements. Rising energy demand will increasingly be met through increased oil shipments from foreign sources, judged by the behaviour of major Chinese players in the industry. Both China and Japan are looking to Russia to provide them with oil. Proposals for the construction of a pipeline from Russia to East Asia are lamenting over the termination point of the pipeline. Bilateral ties would be greatly improved by a Sino-Russian deal. Security in Central Asia is changing. Every country in the region has indicated its willingness to attract investment from China, Russia and the United States. 2 figs