China's Energy Thirst Weighs on Houston's Mind
Date: 18-Feb-05
Country: USA
Author: Deepa Babington
A large gathering of energy executives in the country's energy capital started off this week to the sound of Scottish bagpipes and the swish of kilts, but China pretty much stole the rest of the show.
The Asian giant shook the global energy scene last year when its demand for oil shot up nearly 17 percent, surprising many and worrying many more. China's thirst for oil, coupled with rising demand from neighboring India, has been blamed as a key factor for oil prices' steady ascent over the past year.
At the Cambridge Energy Research Associates conference, a top energy gathering that attracts a cross-section of movers and shakers in the industry, from the chief of Saudi Aramco to Wall Street bankers and analysts, chatter about China largely overshadowed other prevailing issues like the sustainability of record oil prices and declining production profiles.
"Over the last five years we've had growing interest in China but this year what has taken the world by storm has been the sharp increase in Chinese oil demand," said James Rosenfield, co-founder of CERA and senior vice president at IHS Energy, who dressed up in a kilt and played the bagpipes to kick off the conference on Tuesday.
In previous years, the dominant themes ranged from geopolitical uncertainties stemming from the war in Iraq to restoring confidence in the energy industry following Enron's collapse, he said.
Not so this year, where the questions that reigned on the podium and over the clatter of cocktail glasses were: Would China's demand for oil keep up its torrid pace of growth? Would Chinese companies edge out Western oil majors in the quest for new supplies of crude? Has Chinese oil demand changed the energy equation as we know it for good?
The obsession with China underscores the increasing importance of the country's role in the energy paradigm and concern among Western oil companies over its subsequent consequences.
Indeed, ChevronTexaco Corp. Chief Executive Dave O'Reilly's remarks to the conference sounded a seemingly ominous warning about a bidding war for Middle East oil between the Asian entities and Western nations and suggested Uncle Sam take note of it.
Later that day, the head of Saudi Aramco spent time downplaying the idea of such a bidding war, saying the Saudi Kingdom had enough oil to supply to both Asia and the West.
Others, such as ExxonMobil Corp. , outlined plans on how they planned to capitalize on the booming energy marketplace in China. Exxon is already involved in a project to build a large integrated refining complex in Fujian in China and said it is considering building another similar complex in the Guangdong province to expand its presence in the country.
For the most part, analysts and experts repeatedly spoke of how China's role could not be ignored anymore in any energy-related decision.
