Chinese Wells

June 25, 2009

Having the engine of cheap exports able to secure oil and other resources can’t be bad for firing up global economic recovery. So Sinopec‘s purchase of Swiss oil explorer Addax Petroleum — China’s biggest overseas acquisition — should be an encouraging event.

Addax brings high-potential oil blocks in West Africa and Iraq. These are areas that tend to present difficulties for Western oil companies, so the deal exposes gaps that big emerging powers such as China, India and South Korea are looking to exploit. Certainly, these corners of the world are less politically perilous for the People’s Republic than the United States, where local politicians blocked CNOOC’s $18.5 billion bid for oil company Unocal in 2005.

Is it too convoluted to suggest that the bad blood still dripping from the failed Unocal bid might wind up being the grease that gets a world of other deals done for China?

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The Chinese are making substantial progress in securing future energy and commodity resources. They have also found Asia’s biggest high grade iron ore deposit in China’s northeastern province of Liaoning, with reserves of more than 3 billion metric tons.


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