Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China To Continue Expanding Its Influence In The Oil And Gas Sector

Commodities / Energy Resources Oct 14, 2015 - 06:13 AM GMT

By: OilPrice_Com

Commodities Since 2009, China has been taking a much more active role in its pursuit of international oil contracts. In 2009, for the first time, Saudi Arabia exported more of its oil to China than it did to the U.S. China also made large investments in Saudi Arabia's oil refining industry as well. But China's oil investments didn't stop there; they also pursued oil producing Canadian assets in 2011-12.



When it comes to Chinese energy industry, there are three major state owned companies. One is called China National Offshore Oil Company (CNOOC), which is an oil and gas producer, another is called PetroChina, which is another oil producing company, and its third company is Sinopec, which is primarily a refining company.

Lately though, China's large investments are being made in the mid-stream sector of the oil and gas industry, the one sector China doesn't have a national company for. This is the part of the industry that transports oil and gas from producing wells to the refineries, so oil can be turned into liquid fuel.

One of China's most recent mid-stream deals included building a pipeline from Iran to Pakistan, which is being built despite objections from the U.S. The stated reason though, isn't to satisfy China's energy consumption, but to help alleviate Pakistan from its current energy problems.

China's other recent mid-stream pipeline deal was made with Russia. Unlike the pipeline that will travel from Iran to Pakistan, this pipeline deal was made as a means to satisfy China's growing thirst for oil. The pipeline will transport crude oil from Russia to Daqing, China.

This may be why China is now on the verge of creating a new mid-stream pipeline company. The state backed China Securities Journal stated that, the government of China will start stripping away pipeline assets from its three largest firms mentioned above, and then they will sell those assets to private investors. The journal states that this move is aimed at reducing the monopoly its state owned enterprises have enjoyed since their creation. It also said that the move will create more competition within the energy sector, and hopefully reduce the corruption that has been brewing in the Chinese energy industry.

While this sounds legitimate on the surface, there are reasons to believe that these actions will have very little effect.

And that is largely because China is only selling mid-stream assets. These state owned enterprises will still have monopolies on its upstream and downstream assets. And the new company emerging will have a new monopoly on the mid-stream sector of China's oil and gas industry. Instead of competition, it is more likely that this creation of a new mid-stream company will be used as a way for the Chinese government to help monitor and control its transportation and flow of energy.

If China was really concerned about corruption in the oil and energy sector, stemming from the oligopoly that these state-owned enterprises enjoyed, then they would take away all of their assets, and then sell them to the private investors and entrepreneurs. They wouldn't create a new mid-stream company, which will basically have its own monopoly in the mid-stream sector.

Nevertheless, what we do know is that China will be a major energy player for the foreseeable future. On a demand basis, its crude consumption has increased by 10 percent on a year over year basis (YOY). This summer alone, China has already made two new pipeline deals with three different countries. And China is also actively filling up its strategic petroleum reserves (SPR).

Given China's large and growing energy sector, there is a degree of logic in the government creating a new mid-stream company, allowing the state to monitor energy flows. But in terms of its stated reason for creating a new mid-stream company in order to reduce corruption, I just don't buy it.

Article Source: http://oilprice.com/Energy/Energy-General/China-To-Continue-Expanding-Its-Influence-In-The-Oil-And-Gas-Sector.html

By John Manfreda for Oilprice.com

© 2015 Copyright OilPrice.com - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

OilPrice.com Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in