Oil: the case of China

(Financial 25/03/08)
It would not make any sense a State that is not focused on the welfare of its citizens. Look to a country that once passed unnoticed, now having high economic growth and being an example worthy to follow regarding its policy with its oil companies.
Communist China has three oil companies to supply 1,300 million inhabitants, which makes it the second largest consumer of oil worldwide; it has a demand of 6.75 million barrels per day and imports 100 million tons per year, but its oil production is not able to satisfy the country requirements.
The oil shortage oil forced the Chinese government, particularly its largest company, China National Petroleum (NPC), to establish priorities within their purchase of foreign oil companies
Since these events, there were many attempts to purchase several foreign companies but they did not succeed. Such is the case for the oil major Unocal, which received a very attractive bid that was rejected by Washington for political reasons, and was finally awarded to Chevron Texaco.
In Argentina happened a similar situation with when the government tried to buy Repsol YPF.
Chinese continued with their strategy in the Americas, and CNP acquired 100 percent of the Canadian company PetroKAzakhstan Ink (PK) for a total of 4 million 180 thousand dollars, this is the first time that a Chinese company acquires a foreign energy company quoted, which offers substantial means given the strategic value it represents for China.
Their investment has promoted economic development in China and in the countries concerned, so their activity is happily welcomed by them.
The case in Sudan might serve as an example.
Consider:
In 1995, the president of Sudan, Omar al Bashir, visited his Chinese counterpart, Jiang Zemin, to explore the possibility of inviting NPC aiming the construction of a system-wide oil industry.
With the help of NPC, in just 11 months a network of 1,500 kilometers of pipelines was installed, resulting in only two years the construction of the first refinery with an installed capacity of processing 2.5 million tons of crude oil in 1999 and Sudan started its activities exporting oil.
The Khartoum refinery has an annual processing capacity of five million barrels of crude oil.
Chinese designed and provide the high-tech operating today, and all this has boosted the local economy, improved social stability and Sudan has seen its economy grow by 7.0 percent, with inflation of a single digit.
Countries are in a constant search to find better solutions in order to face the future more efficiently.
Nowadays collaboration between countries is vital to reach more efficient economic development.
Mexico is still hesitating to go abroad to obtain the necessary support to exploit their deposits, and is not thinking if tomorrow there will be economic consequences for our actions.
It should be noted that the NPC is now led by Jiang Jiemin.
The company is active in 26 countries and has established 69 different cooperation projects; NPC is ranked eight in earnings of all oil companies in the world (Fortune, 2007).
With other similar actions in the past 20 years, China has managed to lift out of poverty more than 250 million people.
Possibly this type of activity could be replicated in other countries, including Mexico, if these measures were appropriate for us.
Paper done by MsC Salvador Barragan Heredia, candidate for Ph.D. in Law at the University of Anahuac southern Mexico, and headed by Dr. Carlos Miguel Barber Kuri.