"Patience" piped in oil talks ( 2003-10-04 10:40) (chinadaily.com.cn)
China must be patient when dealing with Russian
oil and gas businesses, especially regarding the various twists and turns
involved in the proposed Sino-Russian oil pipeline project, suggests a senior
industry insider.
Premier Wen Jiabao
and Russian Prime Minister Mikhail Kasyanov review the honour guard at
yesterday's ceremony in Beijing to open Kasyanov's official state visit to
China. During their meeting the two leaders agreed to further expand trade
ties between the two countries.
[newsphoto.com.cn]
"Russia's industry is
very young. It is just beginning to develop," Ged Davis, former vice-president
of Royal/Dutch Shell, told China Daily last week.
He made the comments during an exclusive interview on the sidelines of the
Asian Banker Summit, held in Malaysia.
Davis recently retired from the oil conglomerate. It will take time for
Sino-Russian relations to mature, Davis said.
China is one of the world's largest oil consumers, while Russia is one of the
world's largest oil producers.
"As a consumer, you always look to diversify suppliers; and as a supplier,
you always look to diversify customers," he said.
Davis was commenting on the various twists and turns that have hampered the
would-be largest bilateral trade deal between the two countries: A
2,400-kilometre trunk line expected to pipe 700 million tons of Russian crude in
eastern Siberia to Northeast China over 25 years.
Although the countries signed the framework agreement on the US$150-billion
project in March, the Russian
Ministry of Natural Resources indicated earlier this month it might block the
planned route for the Angarsk-Daqing pipeline due to environmental reasons.
The current obstacles might be, at least in part, the result of hard lobbying
by Japan for a rival pipeline bypassing China and stretching to Russia's Far
East port of Nakhodka, experts suggest.
China has been searching for years for ways to reduce its dependence on the
turbulent Middle East for oil. Russia could help satisfy China's growing energy
needs.
Russia, meanwhile, has been looking for overseas cash to revive its battered
economy after the political turmoil in the early 1990s, which left the country's
economy reeling.
Sino-Russian energy co-operation could be a win-win situation, experts
suggest. International politics, especially when it involves oil, can be a
sophisticated game - always more so than envisaged.
Japan's pipeline proposal received warm support from some Russian
politicians. Some speculate the Japanese plan could be approved, as it would
help Japan, and it would create a favourable environment for resolving the
Russia-Japan territorial row over four islands.
Zhang Guobao, vice-director of the National Development and Reform
Commission, confirmed on Saturday the pipeline to China will proceed on
schedule.
But he added market concerns cannot be erased right away.
"Chinese officials should understand the fact negotiations are difficult does
not mean negotiations are impossible," Davis said.
China's oil companies, he added, should do more planning to ensure they have
numerous options for obtaining oil supplies to feed the country's fast
developing economy.
"It's a very important issue (for China) to learn and to respect how the
market works," he said.
"Life is not easy, and that's particularly true in the oil industry, as it's
always involved with difficult geopolitical issues.
"No government wants to feel at risk. It is not only difficult to do business
with Russia, but it's difficult to do business anywhere."
China has been diligently trying to diversify its oil imports to safeguard
its energy security, as the country's economy has been maintaining strong
growth.
China must not overlook the demand side, Davis said. "The key to solving the
energy issue comes back to demand. Tough policies on the demand side will help.
"That will also greatly contribute to the environmental protection."
China should also pay special attention to the use of vehicles, especially as
the nation's auto industry is seeing favourable growth, Davis added.
In terms of Shell's 100-year engagement with China, Davis said, co-operation
is never easy.
"Corporate co-operation is like a marriage. Things can go well, and things
can go bad," he said.
