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Chinese Oil Safari Hits Nigeria

This map shows existing oil reserves on the continent of Africa. China already has oil interests in Sudan, a country which the United States has accused of genocide, and, after Nigeria, Hu will go to Kenya to discuss oil exploration with a government mired in serious corruption scandals.
by Staff Writers
Lagos (AFP) Apr 26, 2006
Chinese President Hu Jintao will arrive in Nigeria on Wednesday to forge closer ties with a key partner in China's campaign to secure enough oil to meet its economy's surging energy demands.

The importance of west Africa to Beijing's strategy was underlined last week when Chinese offshore firm CNOOC confirmed it had sealed a 2.7-billion-dollar (2.2-billion-euro) deal to buy a 45-percent share in a Nigerian oil-field.

And, with Chinese oil consumption expected to rise from 6.59 million barrels per day in 2005 to 6.95 this year, Hu's African tour is seen as an attempt to corner part of the production in the oil industry's fastest growing area.

Nigeria already produces 2.6 million barrels per day, hopes to hit four million by 2010 and sits at the heart of a Gulf of Guinea region where new offshore reserves are coming onto the market faster than anywhere else.

Last year, China bought 38.47 million tons of oil in Africa -- about 30 percent of its total imports -- nine percent more than in 2004. Its biggest African suppliers were Angola, Sudan and Congo, according to Chinese figures.

"China's oil companies hope to become the next generation of supermajor oil firms, and at the moment Africa and Central Asia are among the few places where anyone can do significant new business," analyst Michele Billig told AFP.

"The Chinese are already investing in Africa and trying to compete in areas where the existing giants are well-established," added Billig, who is director of political risk at the PIRA energy group in New York.

Chinese investment in the African oil sector will be welcomed if new exploration and production helps compensate for the upward pressure on world crude prices caused by its economy's insatiable demand for crude.

But some, particularly in the United States, worry that China's communist planners see the continent as a prize in a new "Great Game" to secure strategic advantage by striking exclusive deals rather than feeding open markets.

The White House's National Security Strategy accuses China of expanding trade but acting as if it can somehow 'lock up' energy supplies around the world or seek to direct markets rather than opening them up.

It goes on to blame Beijing for "supporting resource-rich countries without regard to the misrule at home or misbehavior abroad of those regimes."

Multinational firms have invested billions of dollars in Nigeria's oil sector, but President Olusegun Obasanjo's government has been annoyed by some Western governments' occasional criticism of its patchy human rights record.

Nigeria is reportedly seeking to buy naval patrol boats from China to help protect its Niger Delta rigs from rebel attack, at a time when traditional allies are nervous of sending more weapons into an already volatile region.

One Niger Delta state governor, reacting to concerns over attacks on Shell's facilities and rumours the firm might even pull out of the region, grinned and told AFP: "If the Brits don't want the oil, we'll sell it to the Chinese."

One way or another, China -- already the world's biggest consumer of oil after the United States -- will have to find a way to fuel an economy which is industrialising so fast that energy demand could soon outstrip supply.

China already has oil interests in Sudan, a country which the United States has accused of genocide, and, after Nigeria, Hu will go to Kenya to discuss oil exploration with a government mired in serious corruption scandals.

"Hu Jintao must consolidate the supply of oil... He has to do that, it's an obligation on his part," Garth Shelton, a China specialist at the University of Witwatersrand in Johannesburg, said last week.

"Over the next few years we'll see a pattern of engagement with Africa as China consolidates their links with Africa and they will be looking for new partners," he added.

Hu will arrive in Nigeria late Wednesday and meet with Obasanjo, address a joint session of the National Assembly and meet business leaders before flying on to Nairobi on Thursday, officials said.

Source: Agence France-Presse

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