Fossil fuels in international energy policy: China's oil diplomacy in sub-Saharan Africa


Seminar Paper, 2007
20 Pages, Grade: 89

Excerpt

Contents

1. Introduction

2. The political power of crude oil and increasing demand since 1973

3. Fossil fuels in international energy policy: China’s oil diplomacy in
sub-Saharan Africa
3.1 China’s economical history after 1976 and its need for energy
3.2 Africa in international energy policy: relations to China
3.2.1 Production and investment in sub-Saharan Africa
3.2.2 Transportation
3.3 Impacts and chances of Beijing’s oil diplomacy

4. Conclusion

References

1. Introduction

Since the oil shocks in the 1970s, petroleum has not only proven to be an influential factor in international energy policy and the economical development of nations, but also changed dramatically its perception. With the beginning of the industrial age and in context of World War II, the black gold has increasingly become important as it has been used as fuel in almost the entire sector of transportation or the plastics industries. Conflicts, struggles and wars about oil have used to be the major topics in the fight for access on lucrative resources, proven to be true by looking at Western and Asian government’s exertion of influence on countries especially in the Middle East, like Iran, Iraq or Saudi-Arabia, which dispose of huge reserves of crude oil. Nowadays, the rapid economical upturn of the People’s Republic of China has been accelerating the race about petroleum, a resource which gradually becomes less. In order to fulfil its needs, Beijing has adopted a strategy of diversifying its import sources and thus sub-Saharan Africa has come to the fore. The black continent had been neglected for a long time. But, since the discovery and exploitation of new resources in São Tomé and Príncipe or in Sudan and due to the rising oil prices and political struggles in the Middle East, sub-Saharan Africa made a step into the viewpoint of countries like the USA, Great Britain, France, India and of course China, which is currently one of the big players in the African oil sector. Therefore, the present term paper deals with China’s oil diplomacy in sub-Saharan Africa as it is to analyse China’s reasons and the extent of its engagement in this region as well as the implications and impacts that derive from that interests-led diplomacy. After a historical introduction to the political power of oil since the first oil crisis in 1973, the economical development of the People’s Republic of China will be summarised shortly, there from China’s increasing thirst for crude oil. Commencing with China’s relations to Africa, the quantity and quality of China’s investments in the sub-Saharan African crude oil sector as well as the transportation ways of petroleum to the Chinese territory will be explicated, exemplifying the production and investment processes in the top three petroleum producing nations in this region. The main part will be completed by a general description of both negative and positive impacts as well as the consequences of China’s oil diplomacy in sub-Saharan Africa and then lead to a final conclusion.

2. The political power of crude oil and increasing demand since 1973

On the 6th of October 1973, when Israel was attacked by Egypt and Syria which wanted to regain control over Sinai respectively the Golan Heights[1] as well as to wipe out the Israeli government, both Middle Eastern countries declared to interrupt export of petroleum to those countries that supported Tel Aviv during the war (called: Yom Kippur War), such as the USA, France and Germany. Both Arabian states used petroleum as political weapon to enforce their ideological and territorial interests. Several other member states of OPEC (Organisation of the Petroleum Exporting Countries) – to which Syria and Egypt also belong – like Iraq, Libya or Saudi-Arabia joined the approach initiated by Egypt and Syria.[2] Thereon, the oil-dependency of anent importing Western nations quickly became obvious and contributed to dramatic changes in energy use worldwide.[3] The rapid advance of the global market price for crude oil forced affected countries and their governments to impose speed limits and periodical bans on motorised traffic or to spend more money on crude oil-imports. In the case of Germany, the GNP (Gross National Product) in 1974 was in a stalemate, the rate of unemployment in 1973 with 273.000 unemployed people increased to an amount of 1.047.000 people in 1975. A consequence was not only the increasing inflation in the years after 1973, but also the end of the economical boom in Germany which had changed to a situation of stagnation.[4] Before the oil embargo was imposed by OPEC, the oil price in October 1973 circulated at around US$ 3.00 per barrel. By the end of 1974 the price for crude oil had already surged to around US$ 12.00 per barrel and by the end of 1978 to US$ 13.55.[5] A further significant event regarding the economical and political weight of petroleum was the Islamic Revolution in Iran in 1979, when the ruling Shah Mohammad Reza Pahlavi was exiled and Khomeini[6] returned from his exile to Tehran in order to establish and proclaim the new government of the Islamic Republic of Iran. Almost one year later, in September 1980, Iraq attacked Iran and thus a new war (1stGulf War) was started which lasted until 1988 and not only

Abbildung in dieser Leseprobe nicht enthalten

Source of annexed graphic: Williams, James L. (2006): http://www.wtrg.com/prices.htm

disequilibrated the already problematic political situation in the Middle East, but also heavily influenced the global oil production, as Iraq and Iran belonged (and still do) to the biggest oil exporting nations. Consequently, the war and the uncertainty on the global oil market led to a further surge in prices up to more than US$ 50.00 per barrel as for the year 1981.[7] Being a core region of crude oil production, the Iraqi aggression against the Emirate Kuwait in 1990 and in consequence the 2nd Gulf War between Baghdad and Washington contributed to a temporary advance of the global market price for crude oil, too.[8] In the early 1990s to 1997 the consumption of crude oil and thus the global market price for oil rose gradually because of the booming economies in South East Asia and East Asia. OPEC increased its production quota by 10 percent in 1997 in order to meet demands in the Asian emerging countries. With the beginning of the East Asian Financial Crisis in 1998, price levels fell again as a high oil production met lower demand of the black gold.[9] With the end of the crisis and the economical recovery of South East- and East Asian nations like the Democratic Republic of Korea or Malaysia, the recovering economies have been leading again to an increased consumption of crude oil and thus to a noticeable rise of the prices, too.[10] Lastly, further political incidents, such as 9/11, the 3rd Gulf War between the USA and Iraq in 2003, which according to Dr. Mamdouh G. Salameh was rather about oil than about weapons of mass destruction[11], or even natural catastrophes like Hurricane Katrina causing the destruction of several oil platforms in the Gulf of Mexico have made their contributions to a further rise in prices for crude oil up to US$ 77.00 per barrel in October 2006.[12] The table on page three illustrates graphically the effects of political events to crude oil prices since 1947 and hence clearly shows the weight of the black gold in international energy policy.

3. Fossil fuels in international energy policy: China’s oil diplomacy in sub-Saharan Africa

The main part of the present term paper analyses China’s engagement in Africa, especially in sub-Saharan Africa. The geographical taxonomy of sub-Saharan Africa includes all African countries located to the south of the Sahara Desert. The objective of the analysis is to demonstrate the What, Why and How of Beijing’s interests in this region as well as China’s strategies and the impacts of this engagement. The questions thus are “What are China’s interests in sub-Saharan Africa, why is the East Asian country interested in this region and how does it persuade its interests?” Chapter three starts with a short depiction of the history of China’s economy in the post Mao-era. Afterwards, the political and economical relations between China and Africa will then point out the forerunners and reasons of Beijing’s engagement in this region. By examplifying Chinese investments in the three main oil producing countries in this region as well as the important question of transportation of the produced oil will be clarified in the subsequent points. Last but not least, a description of both positive and negative impacts of this engagement both from the economical and diplomatic perspective as well as in the context with energy policy finalise chapter three and lead to the final conclusion of the term paper.

[...]


[1] The former Egyptian territory Sinai and the former Syrian territory Golan Heights had been
captured by Israel during the Six-Day War in 1967.

[2] Williams, James L., (2006).

[3] Salameh, Mamdouh G., (2004), pp.43-45.

[4] Borowsky, Peter, (1998).

[5] Williams, James L., (2006).

[6] The cleric Ayatollah (one of the highest religious titles in Islam) Seyyed Rouhollah Mousavi Khomeini was initiator and leader of the Islamic Revolution of Iran and later Supreme Leader of the new islamic government in Tehran.

[7] Energy Information Administration, (2002); Williams, James L., (2006).

[8] Energy Information Administration, (2002).

[9] Williams, James L. (2006).

[10] Salameh, Mamdouh G., (2004), pp.56-58 and p.84.

[11] Salameh, Mamdouh G., (2004), p.16.

[12] Williams, James L., (2006); Liao, Hueichu, (2006), p.4.

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Details

Title
Fossil fuels in international energy policy: China's oil diplomacy in sub-Saharan Africa
College
Tamkang University  (Graduate School of Economics)
Course
Energy Policy and Management
Grade
89
Author
Year
2007
Pages
20
Catalog Number
V78414
ISBN (eBook)
9783638837026
ISBN (Book)
9783638839068
File size
494 KB
Language
English
Tags
Fossil, China, Africa, Energy, Policy, Management
Quote paper
Niclas Dominik Weimar (Author), 2007, Fossil fuels in international energy policy: China's oil diplomacy in sub-Saharan Africa, Munich, GRIN Verlag, https://www.grin.com/document/78414

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