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Cuba’s Oil Drilling Plan Is A Great Reason To End U.S. Embargo

Apr. 6 2011 – 12:06 pm

Christopher Helman

Cuba has announced plans to start drilling for oil off its shores, in the Gulf of Mexico, as early as this summer. The first well will likely be spudded by Spain’s Repsol, in partnership with Norway’s Statoil. They have reportedly contracted a drilling platform. Other companies lined up to drill include Russa’s Gazprom, India’s ONGC-Videsh, Malaysia’s Petronas, and Venezuela’s Pdvsa. All of these are state-controlled companies; none (except for Statoil) have much, if any, experience drilling deepwater wells anywhere, let alone in the Gulf of Mexico.

The deepwater drilling would likely take place about 100 miles from Key West, Fla. Should Americans be worried about a deepwater disaster in Cuban waters sullying Florida beaches? Well, not according to Rafeal Tenrreyro, head of exploration for Cuba’s state oil company Cupet. Tenrreyro reportedly said on Monday that “safety is more than guaranteed. Cuban institutions have made sure that is the case.”

Perhaps Cuba’s offshore drilling regulators are just as capable as the seasoned engineers reviewing permits at the U.S. Bureau of Ocean Energy Management (BOEMRE), but I doubt it.

The U.S. economic embargo against Cuba is clearly a failure and now that the Cold War is over its continuation has only served to force Cuba into the arms of Venezuela’s Hugo Chavez, who provides Cuba with 100,000 bpd of cut-price oil through Pdvsa.

Now is the time to lift the embargo, or at least ease it to allow U.S. oil companies and drilling contractors to compete for drilling prospects in Cuba.

It’s a no-brainer that we would rather have Chevron drilling 100 miles off Florida than Gazprom or Pdvsa. Plus, the U.S. offshore drilling industry needs the business–which would be substantial if estimates of a possible 20 billion barrels come to pass.

Though BOEMRE has finally begun to issue new drilling permits in the U.S. part of the Gulf, the pace of activity remains glacial. It makes no economic or even political sense to prevent American capital, know-how, and newfound emphasis on deepwater safety from being deployed in Cuba.

President Obama’s Interior Secretary Ken Salazar met with officials in Mexico Monday to discuss the creation of a “gold standard” on drilling in the Gulf. But any agreement would be more like a lead standard unless Cuba were included.

( Original Article )


Soros and Zoi Join Forces to Profit at Taxpayer’s Expense

Posted February 28, 2011

Cathy Zoi

Cathy Zoi, former Assistant Secretary for Energy Efficiency and Renewable Energy, announced this week that she will be leaving her post to go to work for George Soros’ new venture capital firm focused on green energy.

According to her bio on the DOE website , Zoi “manages over $30 billion of American Recovery and Reinvestment Act funds.”  It should come as no surprise that her new job will have her working to secure ‘green energy’ taxpayer handouts and subsidies. Working for the government, Zoi has proved quite capable in that task.  You’ll remember that she came under much criticism for funneling large amounts of that money to Serious Materials where her husband, Robin Roy, is a lobbyist.  Not only that—the two jointly hold over 120,000 stock options in the same company.

Soros, who is notorious for betting against America, has potentially hit a home run on this one.  By investing hundreds of millions of dollars into advocacy groups – like the Center for American Progress – that lobby for increased energy subsidies, he’ll now have a fund on the receiving end to take in those billions in subsidies.  To ensure that this scheme goes off without a hitch, he has hired a person very familiar with giving away the taxpayers’ money.  This could certainly prove to be a huge moneymaker for Soros and Zoi, given the fact that President Obama this month proposed another $29.5 billion for the DOE in 2012.

Venture Beat reports that Soros’ new fund will target growth-stage companies with “proven technologies and business models.”  Given the market failure rate of the so-called green energy economy, one has to wonder if the business model is merely a replication of the world’s oldest profession.

( Original Article )

Put Your Money Where Your Mouth Is for BOEMRE

This post was written with help from intern Kathleen Barker and James Coan, Research Associate at the Baker Institute Energy Forum.

Regardless of whether or not there is a government shutdown on April 8th, it has become clear that the continuing budget problems in Washington could potentially have a significant adverse effect on the oil and gas industry. If the government shuts down, then the offshore permitting activities of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) that have just begun to pick up will also once again stop, albeit temporarily. Now is not a good time to lose momentum in getting BOEMRE on track.

Even if the government is not shut down, budgeting problems have already started to have and will continue to have a significant impact on all federal agencies, including BOEMRE. Currently, worries about a shutdown and where funding will come from are causing agencies to postpone new hiring. In the future, the potential for substantial budget cuts decrease the probability that BOEMRE will be able to rapidly increase its staff to the size needed to clear the additional safety restrictions put in place post-Macondo. If not enough regulators can be hired, it is likely that the permitting process will stay slow well into the future. Moreover, Americans want BOEMRE to be more effective than past agencies, not less so. Thus, a cut in spending for the new agency would be a mistake.

The federal budget commitment to BOEMRE should be going up, not down. That is because post-Macondo we now all realize what an important function this agency plays. We need the agency to be effective not only in processing permits so companies can get back to work in the Gulf coast but also so that we can be assured that permits that are approved have been properly vetted and that safety and environmental processes are being diligently considered.

Giving adequate funding to BOEMRE is a no-brainer. That is because smoother permitting and rising oil production on federal lands is good for government coffers. More wells mean more incoming tax and royalty revenue, which should more than offset the cost of hiring new regulators.

Bottom line: Funding increases to expand the size of BOEMRE’s team helps U.S. energy security, saves oil industry jobs, speeds up recovery in the Gulf Coast and raises important government revenue. So you would think BOEMRE would be an obvious agency not to be hit by budget cuts. Not so. Saving BOEMRE’s budget is highly unlikely politically and gets to one of the main reasons the current climate in Washington is so disconcerting: politicians consider their own partisan agendas that might be at odds with the nation’s.  A lot of time and effort went into finding solutions to the regulatory problems in the Gulf of Mexico. If we the voters thought it was worth the time and trouble to create a new system, we should certainly tell our Congressmen that we insist that the money be spent to implement them.

( Original Article )

FuelFix Blog

Paul Ryan’s Path to Prosperity, 2012

By Ellie Velinska

Progressive talking heads are fainting with excitement on TV over the Islamic world newly found love for democracy. Meanwhile, George Soros funded experts explain to the revolutionary crowds around the world that the reason they cannot afford food is America’s policy to cover the debt with make-believe dollars. They make it sound like the food will be plenty and affordable again if only somebody can get rid of the US dollar as the world currency. Does Mr. Soros care about the mother in Africa who puts her hungry child to sleep? Or is he cheering the humanitarian disaster with hope that it will put him in charge of the new world currency printing press?

Is President Obama ‘quantitivly easing’ his way to re-election or is he ready to get out of office in two years enjoying his life as the celebrity who ‘saved the world from the US dollar’?

The President of the United States is voting present on the fiscal crisis by proposing a budget with deficit over a trillion dollars. That means that Barack Obama is fine with another dose of the borrowing and ‘digitizing’ money: policy that is now deemed to be bloody across the world.

It doesn’t have to be this way. America can save the dollar as the world currency if the politicians stop the financial orgy of the US government. Leadership will not come from the progressives (democrats or republicans), because many of them are just fine with kicking the dollar until it comes home crippling making way for the new Open Society money masters.

Leadership can come from the old-fashioned Conservatives whose radical grandmothers thought them the trick of balancing the budget: don’t spend what you don’t have.

Paul Ryan presented the Republican Path to Prosperity budget balancing proposal. Parts of it make sense; parts of it are very disappointing.

Defense Department seems to be the only part of the government that is functioning in accordance to the reality. Secretary Robert Gates was able to organize house cleaning by collecting proposals for cuts internally so the Pentagon was ready with $178 billion in cuts and savings without waiting for Nancy Pelosi with the hammer, John Boehner with the hatchet and Barack Obama with the machete to appear at the door.

It is a strategy that makes sense. The bureaucrats can have much happier transition during the downsizing of the federal government if they follow the Defense Department lead and cut their own budget before Paul Ryan or other outsiders start digging in their yard. Unfortunately the Ryan’s plan does not go deep enough into the every department or agency’s affairs (with the exception of the EPA where the cuts go deep, very deep…)

The Government Accountability Office also came up with 100 billion in cutting redundancies and gets a ‘You did it’ sticker reward.

YouCut and the earmark ban make easy talking points and identify weird programs and policies that are ready go out the door.

The rest of the federal government consists of creatures that view themselves as Untouchables and if they remain such the US dollar will be over, so the Paul Ryan’s proposal has some plans to shake them up a bit.

The Path leads to reducing the number of the federal workforce by 10% by 2014. It is done in a humane way – on every three retired the government will hire one. The rate of downsizing of the federal workforce is higher than the one proposed by the Obama Debt and Deficit commission (two hired for every three retirees).

Deeply disappointing is the way Ryan’s proposal deals with the fraud and abuse across the federal government. The plan borrows the idea from the Debt Commission about creating a new bureaucracy and hiring more federal agents to look for government waste. This makes as much sense as policing Afghanistan for drugs while letting Charley Sheen to roam around Hollywood with a suitcase full of cocaine. More policing is not going to help until the real cause is addressed. In the case of the government waste the cause for the wide spread fraud and abuse is the insane size of the federal bureaucracy and the purposefully complicated way the business is conducted. The leaner the federal government the easier the waste will be identified. Making up a new committee is adding to the problem, not solving it.

Ryan’s plan is getting rid of many federal subsides including those for energy and agriculture. Those come in the category: too good to become true. The stars in that category are Fannie Mae and Freddie Mac which will be privatized. The proposal is winding down federal insurance guarantees for the GSE monsters and FDIC. Will the banks fly on their own soon? Right there with the pigs.

These are the itsy-bitsy cuts in Ryan’s Path to Prosperity and they seem achievable if good will meets the Republicans in the Senate. The trillions in cuts however come from a tax and entitlement reform that is a bit murky in details, so I will leave them for the next post waiting for a few questions to be asked and answered.

To be continued…


The Moral Liberal Contributing Editor, Ellie Velinska, is the editor of the excellent blog: Big A naturalized American citizen, she lives in North Carolina and is registered as a non-affiliated voter. Ellie attended and completed high school in the USSR and has Masters Degree in Psychology from Sofia University, Bulgaria. In 2000 Ellie and her husband moved to America after winning the Green Card Lottery. She says, the ‘New Media’ is a perfect challenge and quite convenient for her now that she is a mother of two boys.

( Original Article )

Obama’s Libya War Czar Defends Muslim Brotherhood


by Tom McGregor
Tue, Apr 5, 2011, 08:15 PM

The Muslim Brotherhood is a radical militant-extremist Islamic political organization that seeks to overthrow Middle East governments that take a dim view of jihad. They claim they’re fighting for human rights, but actually hold this philosophy: “we demand the world tolerate or intolerance.”

In other words, they seek to impose Sharia Law all over the Middle East and if any Arab government stops them, they’ll just launch violent co-called democracy demonstrations, get the backing of President Barack Obama, CNN and the United Nations and continue to fight until the next regime topples. Libya seems to be the target right now.

Apparently, Obama’s National Security Adviser, Samantha Powers, isn’t making it a secret that she favors the covert philosophy of the Muslim Brotherhood. She inspired billionaire George Soros, an oil speculator, to finance a think tank that advocates normalizing US government ties with the Muslim Brotherhood. The foundation is called the Global Center for the Responsibility to Protect.”

According to New American magazine, “the Global Ceneter was created in February 2008, according to its website, ‘to catalyze action to move the 2005 World Summit agreement on the responsibility to protect populations from genocide, ethnic cleansing, war crimes and crimes against humanity from principle into practice.’”

The doctrine of the organization is frequently drawn up by the International Crisis Group (ICG), which is largely financed by Mr. Soros, who serves on the board of the executive committee.

As reported by New American, “WND reports that the ICG has ‘been petitioning for the U.S. to normalize ties with the Muslim Brotherhood,’ and includes on its board Egyptian opposition leader Mohamed ElBaradei, as well as others who ‘champion dialogue with Hamas.’ The group has also petitioned for the Algerian government to cease ‘excessive military activities against al-Qaeda-linked groups.’”

Soros’s Open Society Institute is funding numerous opposition groups across the Middle East that include those involved in the current Libyan War.

To read the entire article from New American, link here:

( Original Article )


By Pete Papaherakles

Internationalist billionaire George Soros is holding his international conference April 8 to April 11 at Bretton Woods, N.H., the noted birthplace of the World Bank and the International Monetary Fund, where he plans to “rearrange the entire financial order,” as he noted in a November 2009 article in The Japan Times Online.

This “Bretton Woods II” comes along just as the Trilateral Commission will be meeting at the same time in Washington, D.C. With an apparent goal of creating nothing less than a new global economy, Soros is spending $50 million in New Hampshire to bring together up to 200 academic, business and government policy leaders under his Institute for New Economic Thinking (INET).
As AFP goes to press, the attendees are to include ex-Fed Chairman Paul Volcker, former British Prime Minister Gordon Brown and World Bank executive and Nobel Prize winner in economics Joseph Stiglitz.

The conference is slated for the Mount Washington Hotel, site of the historic 1944 Bretton Woods conference, which established the post-World War II international financial architecture.

Soros chose this site because he expects his proposed reforms to be as radical as those promoted by British economist John Maynard Keynes, the much-praised “genius” of the original Bretton Woods project.

Keynesian economics have been portrayed as a cure to the Western world’s postwar devastation, in that governments were liberated of money creation restrictions imposed by the gold standard, even while global financiers controlled much of the world’s gold like they do now. Governments, under the new paradigm after the war, were encouraged to promote economic growth and macroeconomic stability by creating more debt-based money for everything that ailed the economy—debt that has brought most of the world’s economies to the brink of bankruptcy.

Now Soros comes along as the new Keynes to save the day by proposing another miracle solution to our problems, couched in lofty doublespeak such as “reform,” “cooperation” and “equal participation.” Soros is proposing the end of sovereignty as we know it.
“Reorganizing the world order will need to extend beyond the financial system,” Soros wrote in his opinion piece.

Soros is saying that a washed-up America should be replaced by a world government with a global currency under UN rule. He also advocates that China should be top dog while we play second fiddle. What Soros doesn’t say is that two decades of outsourcing U.S. industry, opening the borders and bankrupting the economy with pointless wars and other debacles have been intentionally orchestrated so that now international bankers can tell the world the system is broken and that the individuals who broke it need to show us how to fix it.
Georgy Schwartz, aka George Soros, is a Hungarian Jew who has been described as anti-God, anti-family and anti-American. By his own admission he even helped confiscate the homes of fellow Jews in Hungary in 1944.
In an interview with Steve Kroft of 60 Minutes he said 1944 was the best year of his life. Asked by Kroft if he felt any remorse, he answered, “No, not at all; I rather enjoyed it.”
“No feelings of guilt?” asked Kroft. “No,” answered Soros, “only feelings of power.”

Soros made his first billion as a currency speculator in 1992 by shorting the British pound and causing misery to millions of hardworking British citizens. He went on to cause the 1999 Russiagate scandal, almost collapsing the Russian economy. It was described as “one of the greatest social robberies in human history.”
He did the same to Thailand and Malaysia in 1997, causing the Asian financial crisis of that time. Malaysian Prime Minister Mahathir Mohamad called him “a villain and a moron,” while Thailand’s PM referred to him as “Dracula.” He also helped dismantle Yugoslavia and caused major trouble in Japan, Indonesia, Georgia, Ukraine and Burma by raiding their economies.
Soros also fosters cultural degeneracy by supporting abortion rights, atheism, drug legalization, sex education, euthanasia, feminism, gun control, globalization, mass immigration, gay marriage etc. Soros funded Barack Obama’s campaign and often visits the White House.
At 81, taking down America appears to be his final challenge. “The main obstacle to a stable and just world order is the United States. The time has come for a very serious adjustment,” he said.

( Original Article )

George Soros making a move to control food and grain production

  • March 30th, 2011 1:37 pm ET

Kenneth Schortgen Jr

Financier and progressive activist George Soros is formulating a move to control food and grain production by purchasing grain elevators in late March in several parts of the United States through his Soros Managment Fund’s backed Gavilon Grain.  With purchases made in March, Gavilon Grain will become the third largest grain company behind Cargill, and Archer-Daniels Midland.

With strong ties to the Obama administration, Soros now has both the economic, and political clout to begin consolidation of purchasing and shipping domestic agriculture around the world.

U.S. grain firm Gavilon Grain said on Thursday it will buy Union Elevator and Warehouse’s 16 grain elevators in the Pacific Northwest , the company’s second big purchase of U.S. grain facilities in the last six months.

The purchase of 16 elevators at 12 locations in eastern Washington will expand Gavilon’s grain capacity by 8.4 mbu.

“The addition of Union Elevator’s grain facilities and origination capabilities position us well to support the growing Pacific Northwest export wheat market and serve the Columbian Basin feed grain market,” Greg Konsor, VP and GM of Gavilon Grain, said in a statement. The PNW is the No. 1 wheat export terminal in the United States.  – Reuters

When food brokers consolidate into just a few large companies controlling the majority of a market, then prices can be set not by supply and demand, but by corporate decisions and manipulation of supply.  If the price for food is too low in the United States, then grain can be shipped to other markets for sale, causing then an artifical supply problem in the country that produced the grain itself.

With George Soros’s making this move in backing Gavilon Grain’s purchases to control food and grain distribution in the United States, and becoming the third largest grain company in the country, it will lead to the same results that we see in the energy markets as oil is controlled by a small group of corporations, and the price can be dictated by an artificial control over its supply

( Original Article )

Shifting Sands: Saudi Arabia’s Oil Moves East to China

Published April 05, 2011 in Arabic Knowledge@Wharton

The pivotal year was 2009, according to the Paris-based International Energy Agency (IEA). It was then that China consumed more energy than any other country in the world, even the U.S., prompting an expert at the IEA expert to proclaim “the start of a new age in the history of energy.”

For Saudi Arabia, which has the world’s largest oil reserves and is the world’s largest oil exporter, that new age couldn’t begin fast enough. Over the past 10 years or so, the Kingdom had been forging closer trade ties with China, becoming its key source of oil. In 2009, Saudi oil exports to China reached one million barrels per day (bpd), or 20% of its total oil imports and nearly double the number of barrels it exported the previous year; in contrast, U.S. imports of Saudi oil fell to less than one million bpd in 2009 for the first time in over two decades.

According to Tim Niblock, professor of Arab Gulf studies at the University of Exeter in the U.K., the growing Sino-Saudi oil trade is a reflection of the two countries’ “mutually dependent relationship that has advanced fairly steadily since 2000.” The Chinese need Saudi Arabia as a stable, established oil producer — all the more so today as turmoil across the Middle East continues, pushing the price of Brent crude to as high as US$116 a barrel in early March, and the Kingdom calms markets with pledges to increase production to fill any shortfall in supply. The Saudis need China’s burgeoning demand for oil in light of flat, or even decreasing, demand among consumers in developed markets. Even with the Chinese government lowering the official target earlier this year for average GDP growth over the next five years to 7% from 7.5%, the country’s thirst for oil looks unlikely to abate.

But are those ties now being tested? As unrest sweeps across the Middle East and North Africa, the entire region is on the cusp of change in ways that will affect the geopolitics of oil. “The whole political situation is different than what it was a couple of months ago, and it will stay different for a long time,” says Niblock. “It is a major turning point. Inevitably, that will have foreign policy effects. But it is very difficult at this stage to know what the nature of those effects will be, because we’re really only at the beginning of a process.” Equally unclear, then, is where the Sino-Saudi oil relationship goes from here.

Growing Interest

Though diplomatic relations between the two countries were established in 1990, it wasn’t until 2006, when Saudi Arabia’s King Abdullah made China the first destination for his early state visits after succeeding his half-brother to the throne the previous year, that the bilateral relationship began to gel. As a result, “the Sino-Saudi relationship is expanding across all levels,” says Paul Gamble, head of research at Riyadh-based Jadwa Investments. He cites 2009 data showing that China was the source of 11.3% of the Kingdom’s imports, including textiles and heavy machinery, compared with 6.6% in 2004, while Saudi Arabia’s share of China’s imports rose to 11.2% from 4.8% over that time, thanks mostly to oil. In 2010, bilateral trade reached a record high of US$43 billion, a year-on-year increase of 33%, scooting the countries closer to their goal of having their trade reach $60 billion by 2015.

As for oil, Saudi Arabia shipped 36.7 million metric tons of oil to China in the first 10 months of 2010, about 19% of its foreign purchases, according to Chinese government data. Angola, the second-biggest source, sent 33.7 million tons and Iran 17.2 million tons.

It’s not just about trade, however. “One needs to take into account the significant contracts coming China’s way in Saudi Arabia,” says Niblock. Those contracts involve Chinese companies getting a slice of the US$385 billion that the Saudi government is investing in infrastructure, such as highways and railways, under its five-year development plan launched in 2009.

In reverse, Saudi companies are also investing in China. Saudi Aramco, the world’s largest oil company, has two refineries in China, one in Qingdao province that is fully owned and another in Fujian province run as a joint venture with Sinopec, a Chinese petroleum giant, and ExxonMobil of the U.S. Then there’s the US$32 billion oil-processing joint venture in Tianjin in northern China between two other Saudi-Sino giants — Sabic and Sinopec — which went into operation last year to produce 3.2 million tons a year of ethylene derivatives. More such partnerships could be on the way. During the Tianjin venture’s first quarter results announcement, Sabic’s chief executive, Mohammed al-Mady, cited lower labor and materials costs is a big reason why his company is open to making further investments in China.

An Insatiable Appetite

In other parts of the world besides Saudi Arabia, China has deployed a relatively straightforward strategy to secure access to natural resources — it simply opens its check book and uses a combination of inward investments and trade deals. In Brazil, for example, China lent US$10 billion to national oil company Petrobrás to secure future oil supplies. China’s oil giant Sinopec, meanwhile, bought a 40% stake in Brazil’s other major oil company RepsolBrazil for US$7.1 billion. By August last year, China was Brazil’s top foreign investor, with a finger in everything from iron ore and mineral processing to telecoms and electricity grids.

Though China is driven by an overwhelming need for secure oil supplies via the likes of Saudi Arabia, it’s not afraid of also tapping high-risk countries. Iraq is one example. Precarious political stability aside, Iraq has abundant oil reserves and underdeveloped oil fields. In 2009, China National Petroleum Corporation (CNPC) and BP entered into a 20-year service contract with Iraq’s State Oil Marketing Company to develop the war-ravaged country’s Rumaila oil field. Reports in China’s state press from earlier this year say that daily output from Rumaila, currently the world’s fourth-largest oilfield, is 1.03 million barrels and rising. “The scale and the dynamics of this contract have no precedent,” observes David Butter, head of Middle East research at the Economist Intelligence Unit (EIU) in London. “It provides an interesting paradigm in terms of the working relationship between an increasingly confident Chinese oil company and an old-school Western major.”

China is also banking on oil-rich Russia. “China’s oil production is pretty much maxed out and it needs Russian oil,” Laban Yu, an energy analyst at Macquarie Hong Kong, told Bloomberg in September. “In fact, it needs oil full stop and Russia is close and convenient. As part of agreements to supply oil, Russia wants to have stakes inside China in ventures,” including a venture being discussed between CNPC and Russia’s state-owned Rosneft to build a US$5 billion refinery in Tianjin. And to increase exports from Russia, the first oil pipeline between the two countries was opened earlier this year, financed by a US$25 billion loan from China to Russia.

And it’s not only China’s sizeable check book that has made it such an attractive business partner. Its policy of refusing to meddle in the politics of the countries in which it invests has also opened doors in parts of the world shunned by other governments. While such policy “agnosticism” might be a welcome counterweight in some oil-producing markets to what’s seen as meddling U.S. foreign policy, it has been drawing increasing criticism from other trading partners.Iran, which has the world’s second-largest oil and gas reserves, is a case in point. Despite several rounds of arms and financial sanctions by the United Nations Security Council, the U.S. and the European Union over Iran’s contentious nuclear program, China has continued to sign oil deals with it.

But even close partnerships that eschew politics cannot guarantee oil supplies, according to Ben Simpfendorfer, an economist and editor of China Insider web site. “The best security [for supply] Chinese companies can hope for is to buy oil at the highest possible price,” he noted in his 2009 book, The New Silk Road: How a Rising Arab World Is Turning Away from the West and Rediscovering China, citing examples of China’s state-owned oil companies with deep pockets paying above market rates for oil imports around the world.

Drilling Down

Meanwhile, in cash-rich Saudi Arabia, China has needed a different deal-making strategy. “With one of the world’s most developed energy sectors in terms of infrastructure and operating efficiency, Saudi Arabia is not desperate to attract foreign investment to help expand its capacity to produce and export oil,” a blog on the Saudi-U.S. Relations Service web site notes.  Instead, Saudi Arabia wants to find new sources of steady, long-term demand as Western countries decrease their oil consumption of oil.

“Chinese investment in the Saudi energy sector is relatively modest at present, owing to limited opportunities in the upstream segment and Saudi Arabia’s historical preference for tying up with Western firms offering advanced technology,” says David Butter, head of Middle East research at the Economist Intelligence Unit (EIU) in London. “What is interesting is the building of partnerships and joint ventures between Chinese and Saudi companies. That’s as close as the Chinese can get to owning any oil assets,” he adds.

Those partnerships and joint ventures mark an important recalibration of the Kingdom’s oil policy. “Saudi’s economic relationship is certainly shifting,” says Niblock. “Most Saudi oil is going eastward than westward. Its relationship with the East is becoming more important, and probably more so in the future. It’s not just China. Japan and South Korea are importing a lot of Saudi oil, too.” And as more Saudi oil goes eastward than westward, there’s a new layer of complexity in the geopolitics of oil, involving one of Saudi Arabia’s closest ally, the U.S.

In a bid to diversify its energy sources, the U.S. has been reducing its oil imports from Saudi Arabia, now its fourth-largest supplier of oil, behind Canada, Mexico and Venezuela. But Saudi Arabia and the U.S. are tethered together in ways that go beyond oil. That includes interlocking defence and security strategies in the region. The U.S. State Department also confirmed last autumn that it plans to sell as much as US$60 billion in advanced military aircraft, the largest-ever U.S. overseas arms deal. “Neither China nor Saudi Arabia want to politicize their relations because each of them have good reason not to,” says Niblock. “Saudi Arabia because it remains strategically dependent on the U.S. in weaponry and some other key ways; and in conversations I have had with Chinese officials, they say they are worried about the relationship with the U.S. — they realize the Gulf is very important to the United States, and they don’t want to undermine this.”

But other observers wonder whether tensions might be mounting. In a 2008 report titled, “The Vital Triangle: China, the United States and the Middle East,” Washington, D.C.-based Center for Strategic and International Studies (CSIS) noted that China military buildup around the “vital” sea lanes for shipping oil out of the Middle East, for which the U.S. has long provided security is causing unease. “Analysts wonder about the purpose of the Chinese-built deep-sea port in Gwadar, Pakistan, and its implications for a Chinese military presence far beyond the Pacific Ocean. Gwadar is only 45 miles from the Iranian border and 250 miles from the Strait of Hormuz, making it close to the region’s most vital waterways,” the report noted. Nonetheless, the report’s authors conceded that the China’s “capacity to regulate and dominate the 7,000 miles of ocean between Shanghai and the Strait of Hormuz lies, by generous estimate, half a century down the road. In addition, at present, the Chinese have expressed satisfaction with simply ‘free-riding’ off of U.S. control of the aforementioned supply lines.”

In a radio interview shortly before a China-Arab trade forum last September, Yang Guang, director of the Institute of West Asia and African Studies at the Chinese Academy of Social Sciences in Beijing, said he sees no real sign of a geopolitical rebalancing, even though China is increasingly important for Saudi Arabia and its Middle Eastern neighbors. “If you look at the proportion of trade and investment in the Arab world, China still accounts for a very, very limited proportion. The lion’s share of the business is done with U.S. and Europe,” said Yang.

( Original Aritcle )

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