SHANGHAI (Interfax-China) -- China's interest in exploring oil and gas on Cuba's northwestern coast close to the Florida Keys has further raised the concerns of the United States about the threat that China poses to U.S. energy security, according to Interfax.
China has been trying to boost its presence in the U.S. "backyard", sealing deals with the left-wing governments of Venezuela and Bolivia, and buying up oil concessions in Ecuador. It has also sought closer cooperation with Brazil in the field of oil exploration.
The U.S., for its part, has expressed its opposition to China's global energy strategy, claiming that China is not playing by the rules of the international oil market and is seeking instead to "secure oil at the source.”
While the government of Hugo Chavez in Venezuela has been openly seeking alternative export markets in the face of U.S. opposition, Beijing has sought to take advantage. Meanwhile, China's growing interest in Cuba has been aided by the decades-long hostility towards the Castro regime in Washington.
The U.S. has been urged by Larry Craig, Republican Senator for Idaho, to consider lifting the 43-year-old trade embargo on the Caribbean island to allow U.S. companies to participate in the development of oil resources.
China, said Craig in an address to the Senate last month, is "acquiring exclusive rights in the emerging Cuban off-shore oil sector - thereby forever closing the door on those resources to the U.S. industry and drastically impacting our foreign policy in the region."
"We have hamstrung the U.S. energy sector from seeking additional resources in the region," he added, "while at the same time allowing the likes of China, Canada, Brazil, Spain, France and others to freely seek energy opportunities 50 miles off our coast without competition from state of the art technologies and expertise of our own U.S. gas and oil industries."
He said that potential reserves in the northern Cuban basin could amount to between 4.6 billion and 9.3 billion barrels, according to a 2005 U.S. Geological Survey report.
Despite criticisms from the U.S., the Chinese approach is simple. Acquisitions or joint exploration deals struck with foreign governments are "normal commercial practices", and the U.S., among others, is guilty of "politicizing" the issue.
"We should not politicize the normal trade cooperation [between China and Cuba]," Fu Mengzi, the director of the U.S. Research Department of China Institute of Contemporary International Relations, told Interfax on Thursday.
"It's necessary for China to strengthen cooperation with Latin American countries as it rapidly develops its economy," said Fu.
In February last year, the Cuban President Fidel Castro announced that Chinese drilling rigs would be used to further explore areas that had been identified by a Spanish company as promising. The Cuban government also signed a contract with Sinopec, China's second largest oil developer, to join the Cuba Oil Corporation (Cubapetroleo) to prospect for oil in a 1,700 sqare kilometres block to the north of the province of Pinar del Rio.
The Shengli Oilfield Company, Sinopec's largest oil producing unit, will be responsible for the prospecting and the two partners will share production after commercial operations begin.
Senator Craig told his colleagues on April 26 that U.S. is jeopardizing its energy security by not letting US oil companies explore potential sources in Cuba. China, already the world's second largest energy consumer, "is using this area off our coast as a strategic commodities reserve," said Craig.
Fu Mengzi disagrees with Craig's assessment. "The competition between China and the U.S. in energy is not really a matter that 'you get more and I lose more', even though China's impact on the world energy market is growing due to the rapid economic development," said Fu.
As the top two energy consumers in the world, China and U.S. do have more common interests than conflicts, and "we should enhance mutual trust," said Fu.
Venezuela to Buy 18 Oil Vessels From China
China's increasing cooperation with Venezuela has already set alarm bells ringing in Washington.
China has been hoping to strengthen its position in Latin America, cultivating its links with the region's biggest oil producer, Venezuela, and also signing pacts with the newly-elected left-wing government of Evo Morales in Bolivia.
Venezuela has been a particular bugbear for the United States, with its outspoken President Hugo Chavez openly discussing the idea of diverting oil exports from the U.S. to China.
Plans are underway to construct a pipeline through neighboring Columbia, allowing oil shipments to bypass the Panama Canal and shifted across the Pacific Ocean.
Recently, PDVSA, Venezuela's state oil company, signed two cooperation agreements with the China State Shipbuilding Corporation and the China National United Oil Corporation, a branch of CNPC, the country's largest oil company.
PDVSA signed a memorandum of understanding with the China State Shipbuilding Corporation to buy 18 ships to optimize the marine transportation of crude and its derivatives to the expanding Asian market during the recent visit of its officials to the Beijing company, said PDVSA on Wednesday.
PDVSA is trying to diversify its markets, and it expects to increase the proportion of crude exported to Asia from the current 15% to 45% by 2012, the company said.
The oil tanker deal will involve an investment of 1.3 billion and the agreement also proposed that the Chinese shipbuilding company will help PDVSA with personnel training in technologies.
During the visit, PDVSA also signed an agreement with the CNPC unit to form a strategic alliance to boost crude exports to the Asian continent.
The Hugo Chavez government has been keen on cultivating a closer relationship with China in order to seek to ease its dependence on the United States market.
CNPC sealed two oil supply agreements with PDVSA last November. According to the deals, the Chinese oil monopoly will receive 100,000 barrels of heavy crude and 60,000 barrels of fuel oil per day from the Venezuelan company over the next two years.
Venezuela has promised to supply 300,000 barrels of oil to China on a daily basis or 15 million tonnes per annum within the next few years.
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