Chinese oil insecurity

The Chinese are searching around the world for new sources of oil.  Most of its current oil imports are coming through the increasingly insecure Straits of Malacca.   Canada may be an important future source.  However, the best route for Canadian oil is through the U.S. Aleutian Islands.  The Chinese can't be thrilled about that. 

Eighty percent of China's crude oil imports come through the Straits.  come through the Straits.  Insurance companies are raising rates because of perceived war risks - the pirates are increasingly hard to tell from terrorists.  Asia's Security Perils posts:  East Asian Shipping Co.'s Riled over British Report on Malacca Strait Security (asiansecurity.blog-city.com).

The Joint War Committee of the Lloyd's Market Association, an advisory organization for insurance companies, announced last week it will stand by a report drafted by Aegis Defense System, a London-based security consultancy.

Aegis had released a report in July with quite a dim outlook on security in the Malacca Strait, which resulted in insurance companies designating a "war risk" rating for the trading route crucial to East Asian economies. In turn, ASEAN countries and shipping companies throughout East Asia have been riled. With insurance rates going up, shipping costs have reportedly increased significantly...

I learned about this from asiapundit .

The Chinese are looking for new sources of oil.  They've expressed interest in oil from Alberta's tar sands.    David Zweig and Bi Jianhai write about "China's Global Hunt for Energy" in the September/October issue of Foreign Affairs. 

Summary: Chinese foreign policy is now driven by China's unprecendented need for resources. In exchange for access to oil and other raw materials to fuel its booming economy, Beijing has boosted its bilateral relations with resource-rich states, sometimes striking deals with rogue governments or treading on U.S. turf. Beijing's hunger may worry some in Washington, but it also creates new grounds for cooperation.

These authors point to Chinese interest in Canadian oil:

Energy diplomacy has also prompted China to seek access to Canada's resources, especially the massive tar sands of Alberta. Since late 2004, Beijing and Ottawa have concluded a series of energy and resource agreements, providing for greater Chinese involvement in developing Canada's natural gas sector, its vast oil sands deposits, and its uranium sector. Last April, PetroChina and the Canadian giant Enbridge signed a memorandum of understanding to build a $2 billion pipeline that would carry oil to the western coast of Canada for shipment to Asia. Although no money is yet on the table, western Canadians see China's investment in the tar sands as a major opportunity; according to an Enbridge analyst, without such foreign investment, the fields would remain undeveloped.

Because the earth is round, the shortest route from Canada's west coast to East Asia passes  across the Gulf of Alaska and through the Aleutians into the Bering Sea at Unimak Pass, returning to the North Pacific through the far western Aleutians.  Once past the Aleutians, shipping would still have to pass around or between the Japanese Islands, and between Japan and Korea.  Click on the figure below for more details.

It's hard to imagine the U.S., Japan, or Korea interfering with the rights of innocent passage through these waters.  But the Chinese can't be entirely comfortable about this source and route.   Canadian oil would certainly be vulnerable in the event of a conflict over Taiwan.

Edit August 28: The map above, showing the shipping lanes from the U.S. West Coast to East Asia, comes from a report prepared by the consultants Nuka Research & Planning Group and Cape International Inc. for Alaska's Department of Environmental Conservation.   This report may be found at: Vessel Traffic in the Aleutians Subarea (look towards the bottom of the page for the pdf file)

Comments

[Mark]

Hi Ben, nice write up. On this subject, you must check out a superb post written by a guest blogger at the Peking Duck which has been picked up by just about everybody including Instapundit:

Oil Wars
http://pekingduck.org/archives/002831.php

[Mark]

Hi Ben, nice write up. On this subject, you must check out a superb post written by a guest blogger at the Peking Duck which has been picked up by just about everybody including Instapundit:

Oil Wars
http://pekingduck.org/archives/002831.php

[Poetry]

Take the Pledge

All Presidential Candidates should make pledges like those below. If they refuse, then you should refuse to vote for them.

1. No More Oil Wars.

2. Work for independence from foreign oil on day one.

3. No more wars for corporate profit.

4. No more secret deals for $4 per gallon gas.

5. No more Chicken Hawks promoting wars of choice when they themselves avoided combat.

6. Make government green--if you can't make what you have the most control over green, I don't care about your plans to make the country green.

7. No more torture.

8. No more lying about torture.

9. No more re-defining torture.

10. No more drunken hunting.

11. No more secret deals with big corporations to divide up the spoils before the war even starts.