How Far is China Willing to Go to Ensure its "Energy Security?"

China’s increasing appetite for foreign oil to fuel its rapid economic growth has prompted concern from external observers on the subversive potential of China’s bilateral equity oil agreements to established international norms of state or corporate-led oil procurement. It is claimed - especially from a U.S. policy perspective - that China’s modus operandi of establishing bilateral equity oil agreements with states widely considered unscrupulous by the international community (Sudan and Iran come to mind) is a clear indication of Beijing’s economically aggressive and norms-ignoring approach toward international politics.

But what critics of “Beijing’s equity oil policy” fail to realize is that China’s current “going abroad” policy originated from a market-based profit motives on the part of Chinese National Oil Companies (NOCs) during the late 1980s, as these firms (CNPC, Sinopec, and CNOOC) sought to maintain their continued profitability and enhance their international competitiveness by staking out oil reserves abroad. Surprisingly, the Chinese government did not initially support such an equity oil policy – but as the idea that equity oil agreements enhanced China’s energy security began to take root in academic and political circles, the state’s interest in supporting equity oil imports increased. The relation between equity oil and energy security thus began as an “accidental discovery" – not as one of Beijing’s strongly advocated security prerogatives.

The role of China’s NOCs as the originators of China’s current equity oil policy, when combined with the astounding influence exerted by these powerful oil conglomerates within China’s energy policy-making process, suggests that Beijing does not have as much control over the making of China’s equity oil policy to the degree that its critics have asserted. It remains to be seen whether arguments for continuing China's bilateral equity oil agreements in the name of energy security (and the continued profitability of China's NOCs) will continue to override international outrage and domestic skepticism about Beijing's diplomatic tact on this issue.