The Global Oil Race: China Seeks a Significant Foothold in the Americas

There is much debate in the United States on the dominance of China in the current global economy. These discussions are quite valid as Latin America weathered much of the 2008 economic crisis based upon natural resource exports to China to bolster their booming economy. Canada was also able to rely on natural resources to keep its economy above water since 2008 with exports to the U.S. and China. America’s neighbors, however, are turning to China due to its healthy economy and apathetic policies coming from the U.S. over the last decade towards its own backyard. The lack of concrete and consistent U.S. attention towards Latin America and the waffling on the Keystone pipeline from Canada has left many of America’s neighbors baffled at the under-utilized pull the United States has in its own neighborhood. Considering security threats towards the U.S. and its allies coming from Iran, Canadian Keystone supporters are puzzled by the consistent pauses in accessing North American fuel resources over oil that comes from regions where conflict is a constant.

China is in a unique position in history as it is at the end of its manufacturing boom and cash rich époque and is becoming well aware of its own demographic challenge that may derail its rapid development. Currently, China is seeking to transform itself into a knowledge economy while it has the resources and power to make lucrative R+D deals and build the educational infrastructure to push China into a healthier future. The major policy motivator is the age of workers in the manufacturing sector in China. Chinese workers consist of individuals who have one child or less and who are approaching retirement age in the next ten years. This reality has moved China’s manufacturing growth policy towards diversifying and modernising its economy so that growth can continue when manufacturing the world’s consumer goods has tapered off from current export levels.

The other priority for China is to secure the R+D and resources to support its current boom and gain the know-how to access its own natural fuel resources in the future. Over the last few years, Chinese oil firms have purchased wholly or in part many oil and gas reserves in South America. These purchases, while lucrative, also were done in a way that did not take full advantage of the extraction and use of the resources and were done in a somewhat disorganised way so that the final sale of the product did not always directly benefit China’s oil security. Enter Keystone, while the U.S. still debates and tries to decide on the costs and benefits of Canadian oil and its accompanying pipeline, the Canadian government debates whether or not a pipeline to the British Columbia coast would be a better option in order to sell fuel resources to Asia, more specifically, China. In order to secure a better option for China, Chinese oil firm CNOOC is seeking more lucrative and organised benefits in the Americas. CNOOC is currently is trying to purchase a large Canadian oil firm in Alberta, Canada, in order to create a base of operations in Calgary, offer stock trading in Toronto’s Stock Exchange and gain the R+D to access hard to extract oil and gas reserves in China itself.

This Calgary office in the heart of North America’s largest oil and gas reserve is a reflection of China’s more sophisticated resource policy growing into a new phase after years of sloppy oil policy in Latin America and Africa. For America’s neighbours, allies still always seek the greatest benefits for their own economic conditions. A lack of assertiveness in U.S. policy towards its neighbors may hurt the US more than its neighbours. After a decade or more of U.S. attention towards the Middle East, a holistic approach to U.S. foreign policy is the only way to work out some of the inconsistencies in U.S. policy abroad, to only be decided after the election of course.