Friday, August 14, 2020

GWPF Newsletter: China To Expand Its Influence In The Middle East With Major Oil Deal


Fierce Competition Starts Between US, China For Energy Corridors in Central Asia

In this newsletter:

1) China To Expand Its Influence In The Middle East With Major Oil Deal, 11 August 2020
2) Fierce Competition Starts Between US, China For Energy Corridors in Central Asia
Times of India, 3 August 2020

3) China Boosts Shale Gas Development
Argus Media, 31 July 2020
4) Kamala Harris’s Fracking Record Scares Big Oil But Attracts the Left
Bloomberg, 12 August 2020
5) Trump vs Biden: Deep Split Over Future Of US Shale Gas
Energy Intelligence, 12 August 2020
6) Polls Show Climate Issue Is Going Down In Flames As Coronavirus Steals Spotlight
Valerie Richardson, The Washington Times, 11 August 2020
7) And Finally: Chinese Science Fiction’s Disaster Dystopias
Joel Kotkin, Quillette, 11 August 2020

Full details:

1) China To Expand Its Influence In The Middle East With Major Oil Deal, 11 August 2020

China continues to expand its influence in the Middle East through oil and infrastructure deals, and the latest deal with ADNOC is a great example of how Beijing looks to grow its presence in the offshore oil business

It is little surprise to see that China – again – figures in yet another concessions award in the Middle East, this time relating to the Abu Dhabi National Oil Company (ADNOC). In the aftermath of Saudi Arabia’s second disastrous oil price war against the U.S. shale sector, virtually all major Middle Eastern state-owned oil firms are looking to plug varyingly significant operational deficits, as are their governments.
In the absence of a sudden major spike in oil prices, economic survival in practical terms now comes down to one of two broad options. The first is to sell off chunks of state assets in initial public offerings (IPOs) or stakes in ongoing oil and gas projects, which ADNOC recently did with the sale of a 49 per cent stake in its gas pipelines for just over US$10 billion to international investors. The second is to sell-off the same assets to companies from countries for which the immediate economic shortfall inherent in such deals pales into insignificance compared to the longer-term geopolitical and financial advantages. In this latter regard, Russia has its own financial constraints to deal with but China does not.

Specifically, ADNOC has announced the transfer of ownership rights in its Lower Zakum, and Umm Shaif and Nasr offshore concessions from the existing holding of the China National Petroleum Corporation (CNPC) to China National Offshore Oil Corporation’s (CNOOC) subsidiary, CNOOC Limited. This will be done by CNOOC acquiring a 40 per cent interest in CNPC’s majority-owned subsidiary PetroChina Investment Overseas (Middle East) Ltd (PetroChina) through its holding company, CNOOC Hong Kong Holding Limited (CNOOC HK). After the proposal has been approved by Abu Dhabi’s Supreme Petroleum Council (SPC) – a rubber-stamping affair - CNOOC will join the principal operating consortium in the Lower Zakum concession, comprising India’s ONGC Videsh (10 per cent stake), Japan’s INPEX Corporation (10 per cent), China’s CNPC (6 per cent), Italy’s Eni (5 per cent), and France’s Total (5 per cent). CNOOC will also join the principal operating consortium in the Umm Shaif and Nasr concession, comprising Total (20 per cent), Eni (10 per cent), and CNPC (6 percent).
Significantly, aside from the broader relentless expansion of China into the Middle East, in line with its multi-generational ‘One Belt, One Road’ programme, this deal marks the first time a dedicated Chinese offshore oil and gas company has joined in any ADNOC concession. These points did not go unnoticed by the chairman of CNOOC, Wang Dongjin, who said: “CNOOC will leverage our extensive expertise in the offshore sector and be dedicated to value creation in these concessions for our mutual benefit.”
In this context, this latest deal follows the signing on 22 July 2019 of a comprehensive framework agreement between ADNOC and CNOOC to ‘explore new opportunities for collaboration’ in the upstream, midstream, and downstream oil sectors as well as in liquefied natural gas (LNG). Described at the time by ADNOC chief executive officer, Ahmed Al Jaber as “far-reaching”, the deal is such a significant move by China into the core oil and gas interests of one of the U.S.’s few remaining vocal allies in the Middle East - the UAE - that the deal signing ceremony was attended in person by China’s President, Xi Jinping.

Although couched in the usual platitudes expected in such deals, even the official guidance on its contents highlighted its vast scope and scale. For example, ADNOC and CNOOC, according to the official published notes on the agreement, will ‘share knowledge, best practices and technologies in ultra-sour gas development to improve operational efficiency in gas processing and treatment, deliver efficiency, performance and reliability for drilling operations and develop field and reservoir development plans’.
As an adjunct to this, China’s Offshore Oil Engineering Company (COOEC) would be in prime position for associated engineering, procurement and construction opportunities, as would China Oilfield Services Ltd (COSL) for the supply of oilfield services and to explore collaboration opportunities in offshore oil and gas field assets in Abu Dhabi.

Full post

see also China’s Emerging Middle Eastern Kingdom


2) Fierce Competition Starts Between US, China For Energy Corridors in Central Asia
Times of India, 3 August 2020

Beijing [China], August 3: As the US has called 'for a new alliance of democracies' to counter China's aggressive policies, Beijing has begun adding more potential new trade and energy corridors linking Central Asia with South Asia and the Middle East. 

"Fundamental realignments are taking place across the world at a challenging, transformative time in international affairs when global power is shifting to the East. Our region is no exception and is also witnessing a reordering of relationships," Maleeha Lodhi, who has served as Pakistan's ambassador to Britain, the US and the United Nations, was quoted as saying by the South China Morning Post.

To counter China's expansionist policies in the South China Sea, the US is on a mission to have a quadrilateral alliance with Japan, Australia and India.

Recently, the US special representative to Afghanistan Zalmay Khalilzad was for the first time accompanied by Adam Boehler, chief executive of the US International Development Finance Corporation, to tour Qatar, Pakistan, Afghanistan, Norway and Bulgaria.

In a series of meetings with the foreign ministers of Pakistan, Afghanistan and the five Central Asian republics - as well as Taliban negotiators based in Qatar - Khalilzad and Boehler sought to reinforce the message that Washington intends to remain the top geopolitical player in Afghanistan, on the basis of its continuing role as the country's major financier, South China Morning Post reported.

During talks with the Central Asian ministers in Tashkent on July 1, the US reportedly proposed to help fund a railway project to link Uzbekistan via Afghanistan to Pakistan and India.

As the US continues to give the countries an alternative to China's financing, Beijing is striving hard to deepen cooperation with all belt and road partner governments in South and Central Asia and the Middle East.

The South China Morning Post reported that in a rare four-way video conference on July 27 with the foreign ministers of Nepal and Afghanistan and Pakistan's development minister, China's foreign minister Wang Yi proposed expanding their pandemic cooperation to establish a "green corridor" between them.

Wang also discussed the development of a multimodal trans-Himalayan corridor, which would integrate Nepal into the belt and road plan via Tibet, Xinjiang and Gwadar.

He also pressed upon the extension of the China-Pakistan Economic Corridor (CPEC) into Afghanistan.

Full story
3) China Boosts Shale Gas Development
Argus Media, 31 July 2020

China stepped up shale gas development last year, as the country looks to fall back on unconventional output to drive natural gas production growth.
Newly proved gas reserves fell by 2.7pc to 809bn m³ in 2019 from a year earlier after a larger increase the previous year.
Last year's reserve additions were mostly located in the Ordos and Sichuan basins in north and southwest China, the country's natural resources ministry (MNR) said.
Newly proved gas reserves rose by nearly 50pc to 831bn m³ in 2018 from 2017 levels.
But of 2019's incremental proved gas reserves, shale gas made up over 90pc of the total, rising more than fivefold to 764bn m³. This included PetroChina's Changning-Weiyuan and Taiyang as well as fellow state-controlled firm Sinopec's Yongchuan shale gas projects, all located in Sichuan.
China added 41pc more shale gas output, reaching 15.4bn m³ last year, the MNR said.
PetroChina, the biggest beneficiary of subsidies given to unconventional gas development, may add up to 4bn m³ of shale gas output this year to reach 12bn m³. 
Full story
4) Kamala Harris’s Fracking Record Scares Big Oil But Attracts the Left
Bloomberg, 12 August 2020

Less than two hours after Kamala Harris was named Joe Biden’s running mate, President Donald Trump had cast the California Democrat as an oil industry and fracking foe.
“She is against fracking. She’s against petroleum products,” Trump said at a White House news conference Tuesday. “I mean, how do you do that and go into Pennsylvania or Ohio or Oklahoma or the great state of Texas? She’s against fracking. Fracking’s a big deal.”

It’s a line Trump will surely use again and again against Harris, the former California attorney general who has vowed to fight the fossil fuel industry in court, embraced the Green New Deal and last September said there was “no question” she’d ban hydraulic fracturing. But the criticism may have limited appeal beyond Trump’s political base and is likely to boost enthusiasm for the Democratic ticket among progressive voters.
Harris’s positions on the issue put her to the left of Biden, who has made clear he would not seek an outright ban on fracking, which could only be imposed through congressional action. Nevertheless, Harris and Biden have both promised to curtail oil and gas development on federal lands and waters managed by the U.S. government. And a senior campaign official reiterated last month that Biden would block new fracking on federal lands.
The “fracking” technique is used to coax oil and gas out of some 95% of U.S. wells today, and Trump has been touting his support for the industry as he campaigns for a second term in Pennsylvania and other swing states.
More from Election

Biden’s energy agenda was already “setting up to be the greenest in U.S. history,” but adding Harris to the ticket signals the Biden administration would “aggressively” pursue its policy goals, ClearView Energy Partners said in a research note to clients.
Some oil industry figures already fearful of Biden’s environmental agenda worry Harris would bolster his resolve to combat climate change and stifle fossil fuel development, including through regulations making them more expensive to produce. But industry advocates plan to emphasize the importance of oil and gas as an engine driving the U.S. economy and critical to its post-pandemic recovery.
“The oil and gas industry represents about 8% of the American economy,” and is “a very important component of our recovery,” American Petroleum Institute President Mike Sommers said by phone. “The world looks a lot different behind the desk in the Oval Office than it does on the campaign trail, and we’re an industry that represents 10 million American workers and will be a key part of that recovery.”

The oil and gas industry faces significant headwinds, not least from the historic drop in demand caused by the coronavirus pandemic. Gas companies seeking to build new pipelines have been stymied in court recently, and some economists have argued a more effective recovery plan would involve green-friendly policies.

As California attorney general, Harris filed lawsuits against Phillips 66ConocoPhillips and other oil companies for alleged environmental violations. Her office secured criminal indictments against Plains All American Pipeline LP for a 2015 spill in Santa Barbara, California, which resulted in convictions in 2018, after Harris was elected to the Senate.

Harris also has a history of tangling with oil refiners that have operations in California -- a pugilistic approach that could add heft to Biden’s threat to target fossil fuel executives and “put them in jail.”
Full story
5) Trump vs Biden: Deep Split Over Future Of US Shale Gas
Energy Intelligence, 12 August 2020
Gone are the days when US policymakers broadly agreed on the role of natural gas as a “bridge” to a low-carbon future. As the 2020 US presidential race proves, the partisan divide on the issue has widened and deepened.

President Donald Trump continues to see gas as a green fuel, and has made the road easier for LNG project approvals, regulations and access to land. Presumptive Democratic presidential nominee Joe Biden is calling for all fossil fuels, gas included, to be eventually phased out under a net-zero emissions economy.

This is a noticeable pivot from the days of former President Barack Obama, when Biden served as vice president. The Obama-Biden White House spoke positively about gas’ role in replacing coal-fired power and generally granted land access for gas development with some environmental stipulations. Today, Biden is championing an ambitious climate agenda that would eventually squeeze out gas, assuming that he wins and the plans are pushed through and then upheld by future administrations. On top of targeting net-zero emissions by 2050, Biden is eyeing a carbon-free power sector by 2035 and would block any new access for exploration and production on federal lands. These goals are quite ambitious, however, and would likely run into resistance from Congress, the courts and fossil fuel-dependent states.

The shift is significant but unsurprising. Concern about climate change has steadily risen among the US electorate as extreme weather events have intensified, surveys show. Reinforcing these sentiments is the growing environmental justice movement, intended to protect racial minorities from disproportionate environmental risk, which has gained momentum following the police killings of George Floyd and other African Americans this year. At the same time, the Covid-19 pandemic has driven home the consequences of a world ill-prepared for crises.

Energy Intelligence explores the most important issues for the US gas industry and how Biden and Trump compare.
LNG Exports and Pipelines
Biden’s climate platform calls for “every federal infrastructure investment” and “any federal permitting decision” to consider greenhouse gas emissions and climate impacts. This suggests that Biden would set a higher bar for LNG export authorizations and gas pipeline decisions, with extra layers of review and a greater likelihood that some projects would be rejected. Such reviews would also take place through the lens of Biden’s emissions targets, leaving little room for gas over the long run unless still-costly carbon capture technologies are deployed.

Under Trump, LNG exports have been consistently authorized by the Department of Energy as part of the pursuit of American energy dominance (WGI Jul.29’20). His appointees to the independent Federal Energy Regulatory Commission, which decides on physical LNG export infrastructure, have generally done the same even as climate considerations have been integrated into agency decisions in recent years.
Gas pipelines have seen much the same landscape and, just a few months ago, Trump enacted reforms that significantly simplified the approval process for pipelines under the National Environmental Policy Act.
Methane Emissions
On the upstream side, Biden’s platform calls for “aggressive methane pollution limits for new and existing oil and gas operations.” This would likely involve numerical targets for methane reductions and require the use of best-in-class technologies governing leak detection and repair.
Trump, by contrast, has rolled back Obama-era methane regulations significantly and is close to finalizing some of those reversals soon, to the chagrin of environmentalists who note that methane is a potent, albeit short-lived, greenhouse gas. Majors, as well as some independents, also acknowledge the need to slash methane emissions if gas is to have any role in a low- or zero-carbon world (WGI Jul.15’20). But Dan Naatz, president of the Independent Petroleum Association of America lobby group, says US producers would prefer regulations that don’t mandate a particular technology for methane reductions. “Technology always moves faster than you think, and to the betterment,” he tells Energy Intelligence, insisting that the industry agrees on the need for dramatic improvements. “As we’re making technology better, it doesn’t make sense to cut it off.”

Land Access
Cutting off access for climate reasons is indeed what Biden has proposed, but only for new oil and gas developments, and only in areas under federal control. 

Full post
6) Polls Show Climate Issue Is Going Down In Flames As Coronavirus Steals Spotlight
Valerie Richardson, The Washington Times, 11 August 2020

Even as Democrats place climate change at the forefront of their election strategy, polls show the novel coronavirus pandemic is taking the wind out of the climate issue’s sails.  

Harris Poll survey conducted for Fortune found that climate change has dropped since December from first to second-to-last on a list of a dozen issues facing society, according to Harris CEO Will Johnson, who added he was “personally surprised and discouraged to discover that our devotion to the world around us is flagging.”

“Among Gen X men, in fact, more than third dismiss climate change as unimportant,” said Mr. Johnson in a Monday post. “COVID-19 and the recession have, of course, reordered priorities around the world. Still, the coronavirus didn’t elbow aside other issues as muscularly as it did climate change.”
The post was headlined: “Amid COVID-19, Americans don’t care about climate change anymore.”

Meanwhile, a Gallup poll taken July 1-23 found climate change ranked last on a list of 16 non-economic issues, with “coronavirus/diseases” ranking first and “the government/poor leadership” coming in second, while crime and the judicial system rose in importance.
Only 1% of 1,007 U.S. adults surveyed ranked “climate change/environment/pollution” as “the most important problem facing this country today,” down from 2% in the May 28-June 4 poll, according to the Gallup results released Aug. 5.
The surveys come as Democrats for trillion-dollar investments in wind and solar energy as part of a national strategy to combat the rise in atmospheric carbon dioxide. The Biden campaign’s climate plan would spend $2 trillion to achieve net-zero emissions by 2050.
Previous surveys have shown that Americans are concerned about climate change but not concerned enough to open their wallets. An AP-NORC poll released last year found that 68% were unwilling to foot even a $10 increase in their monthly electricity bill to combat global warming.
“Was there any amount Americans were willing to pay to combat climate change? Yes, $1 dollar,” said the Cato Institute analysis. “Fifty‐seven percent (57%) of Americans would be willing to pay a $1 a month fee in their electric bills to combat climate change.”
Given a list of nine policy initiatives that could “fight global warming or help the environment generally,” the Harris Poll found that only one drew majority support: 51% supported “tax credits or rebates for greater energy efficiency in buildings.”

“Moreover, 13% of all respondents say the government should do nothing to improve the environment, a stance that rises to nearly one in five of all survey takers in the South,” said Mr. Johnson.

He noted that the pandemic has resulted in reduce greenhouse-gas emissions. Airline travel has plummeted, and car travel has also decreased as many Americans work from home under shelter-in-place orders.
When the pandemic ends or comes under control, however, “American adults say they’ll behave in ways that would increase their carbon footprint,” Mr. Johnson said.
“According to our survey, we’ll drive as much as we did before, take public transportation less, bicycle or walk less, buy more clothes, and have more stuff packaged up and shipped to our homes,” he said. “And most of us plan to jack up the home AC and heat even more than we already have.”
Full story
7) And Finally: Chinese Science Fiction’s Disaster Dystopias
Joel Kotkin, Quillette, 11 August 2020

Sold as a dream, China’s future vision really constitutes a nightmare that we should seek to constrain and avoid.

In Ma Jian’s new novel, the protagonist, Ma Daode, may be a corrupt, womanizing local official, but he is a corrupt, womanizing local official with a mission. His goal is to develop a drug that will allow President Xi Jinping’s vision of a glorious Chinese future to dominate not only citizens’ daily lives but their sleeping hours as well. This is his utopian quest. The China dream, Ma Daode suggests, “is not the selfish, individualist dream chased by Western countries. It is a dream of a people, a dream of the entire nation, united as one and gathered together into an invincible force.” This mindless worship of hierarchy and control permeates his thinking.
China Dream was published in 2018, three years before the 100th anniversary of the founding of the Chinese Communist Party, and it provides insights into the Middle Kingdom that are becoming harder to find as control of local media tightens. It is a product of the “golden age” of Chinese science fiction, notes the New Scientist, that has been able to transcend the controls increasingly imposed on most non-fiction writing and public discussion. Author Liu Cixin has argued that, unlike the earliest days of the genre during the last days of the Qing dynasty, Chinese science fiction no longer fits a science-based optimism underlying the Communist vision. Such views, he observes, have “almost completely vanished.”

Contemporary Chinese writers are continuing the tradition of anti-totalitarian science fiction. Yevgeny Zamyatin’s 1921 novel We explored the dangers of a Soviet regimented society dedicated to erasing the individual; the works of the Polish author Stanisław Lem identified the various underlying hypocrisies of the old Soviet Empire. Other classics, like George Orwell’s 1984 or Aldous Huxley’s Brave New World, presaged developments still evident and threatening today.
Ma Jian now lives in London and sees his task as similar to that of Orwell. In his introduction to China Dream, he writes that Orwell “foretold it all.” Xi’s “national rejuvenation,” Ma adds in the Afterword, reprises the horrors of the last century—it requires complete control of the population’s thoughts and the elevation of the leader himself to demigod status. China’s race towards the perfect state, he warns, will produce the same result as the Soviet experiment: “Utopia,” he reminds us, “always leads to dystopia.”

The new global vision
Critically, the “Chinese dream,” like that of the late Soviet Union, is not only meant for local consumption. “If we meld traditional Chinese values with Marxist ideology,” Ma Daode’s party superior suggests to him, “the China dream will be embraced by every nation. The world unity so desired by Genghis Khan will be accomplished by our generation of Party leaders.”
As China Dream suggests, the Middle Kingdom now represents the most profound philosophical challenge to liberal values since the end of the Cold War. And they are not without their Western admirers. Standard Chartered Bank, for example, predicts that China will surpass the US as the world’s largest economy as early as the end of this year.

This sense of China’s inevitable preeminence has been bolstered by the Western decline after the Great Recession, convulsions over climate change, and the COVID-19 pandemic, now thought by some analysts to have been a “triumph” for President Xi. “Western nations are not going to collapse, but the smooth operation and friendly nature of Western society will disappear, because inequity is going to explode,” predicts Jørgen Randers, a professor emeritus of climate strategy at the BI Norwegian Business School. “Democratic, liberal society will fail, while stronger governments like China will be the winners.”

Some prominent Westerners even see China’s rise as the product of a system that is in some respects superior. As two law professors recently argued in the Atlantic:

"In the great debate of the past two decades about freedom versus control of the network, China was largely right and the United States was largely wrong. Significant monitoring and speech control are inevitable components of a mature and flourishing internet, and governments must play a large role in these practices to ensure that the internet is compatible with a society’s norms and values."
The New York Times’s journalist Thomas Friedman, meanwhile, embraces the Chinese notion of granting more power to credentialed “experts” for societal problems, arguing that they are too complex for elected representatives to address. The similarly minded economist Jeffrey Sachs denounces what he calls “an evangelical crusade” against the Chinese regime, pointing out that America’s own repressions disqualify any presumption of superiority.
Even some greens have rallied to China’s cause, which is faintly amazing given that the country produces more greenhouse gases than the US and EU together. Former California Governor Jerry Brown likes China’s top down approach and has embraced the notion of “brainwashing” as a necessary means of getting the masses to fall into line with the preferred emerging climate consensus. This Western admiration for Chinese authoritarianism is reminiscent of those who allowed themselves to be seduced by Stalinist propaganda in the 1930s, peddled by influential journalists such as the Times’ Pulitzer Prize-winning Walter Duranty.
A model for the “surveillance society”
The British academic David Lyon writes about the emergence of “the surveillance society,” in which all individual activities are monitored from above. It is becoming, as one writer put it, “what Orwell feared.” In China, efforts to expand digital control have been boosted by US tech companies, including Apple and Google as well as Intel, Hewlett-Packard, and Western Digital. These companies have shown particular interest in China’s facial recognition systems, which is being used heavily in the Xinjiang region of western China, where Muslim Uighur dissidents are seen as a serious threat to the regime.

This is a place where simply wearing a beard, or giving your child a Muslim name, can draw the attention of the police. The facial recognition system allows authorities to follow someone on a watchlist; if they stray more than 300 meters from home or workplace, they could be arrested. The regime is also aiming to collect DNA from every resident of Xinjiang, and implementing a satellite tracking system for every vehicle in the region.
“They are combining all of these things to create, essentially, a total police state,” said William Nee, a China campaigner at Amnesty International.
This “surveillance society” is not restricted to Xinjiang province. The regime plans to deploy over 400 million surveillance cameras in cities across the country by the end of the year. This surveillance is designed to regulate behavior, making it much more dangerous to express dissent, or even to commit a minor violation of traffic laws. The regime is also tracking smartphones and harvesting biometric data. Brain-reading technology seems destined to become more commonplace in Chinese factories, ostensibly to improve productivity, but also with a clear potential to monitor and manipulate the thoughts of workers.
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The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at

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