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The Scramble for Energy Resources Picks Up

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The United States' stake may be lagging as tensions increase.

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Editor's Note: This article was written by Fawzia Sheikh of OilPrice.com, which offers free information and analysis on energy and commodities. The site has sections devoted to fossil fuels, alternative energy, metals, oil prices, and geopolitics.


China's completion of a historic natural gas pipeline with Kazakhstan -- bypassing Russia this week -- tightens the Asian behemoth's grip on energy resources needed to fuel a burgeoning economy, a desire also forcing it on a quest for oil and gas wealth in other corners of the globe.

China isn't alone in this scramble for energy security. Hungry for oil and gas, world powers like Russia and the United States are also relying on different strategies to grab resource treasures, but their efforts have raised questions about conflicts down the road.

The US Energy Information Administration describes China as the second-largest energy consumer behind the United States. Taking advantage of the world's financial crisis, the Asian powerhouse has tapped currency reserves to invest in both Russia and Central Asia, helping to construct power plants and other domestic infrastructure in return for long-term oil and gas supplies, said Ben Montalbano, a senior research analyst at the Washington-based Energy Policy Research Foundation.

Lacking energy reserves, China has been "working hard to lock in" investments in Africa, Central Asia, and Venezuela, Montalbano told OilPrice.com. The country has also sought natural gas to satisfy increasing consumption and built many liquefied natural gas-receiving terminals over the last year, he added.

"Cut off from African natural resources… China's growth stops," warned Peter Pham, director of the Africa Project at the New York-based National Committee on American Foreign Policy and an associate professor at James Madison University in Harrisonburg, Virginia.

This intensive bid for energy, however, has caused friction with the world community. Under an investment strategy in Africa, China "wins over very easily governing elites but doesn't necessarily win over the populace," Pham charged.

Chinese state-owned companies tend not to invest in exploration but prefer to offer "inducements," he said. China's offer of multibillion-dollar credit facilities to Angola was pivotal for the African nation to get "off the hook" from negotiating with the International Monetary Fund and the World Bank to meet "serious reform and certain conditions" before the organizations granted such facilities, he argued. China then bought stakes from the Angolan state oil company, he said.

China, moreover, has helped the Khartoum government to evade United Nations sanctions by assisting in the building of at least three weapons factories in Sudan, he said.

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