China’s ever expanding economy is one of the key drivers behind the increase in energy costs globally. Millions of additional barrels of oil and billions of BTUs of natural gas are required to fuel the country’s growing needs, which is one of the many reasons China’s largest state-run energy company signed a trade agreement today with Russia’s main gas exporter, Gazprom.
How important was this deal? Take a look at who showed up to sign it: Russian Prime Minister Vladimir Putin and Chinese Prime Minister Wen Jiabao. Now guess where they signed it: the Great Hall of the People in Beijing.
In the global marketplace, the Chinese have a huge advantage over American companies, a fact Boone Pickens singled out in his best-selling book The First Billion is the Hardest:
“China now has an edge on us in the global race for oil, and it’s a powerful advantage. The Chinese government owns one-half of the oil they use. They have to import the other half, which makes them the second-largest importer of oil after the United States, and they are very aggressive about securing this other 50 percent. They know that their future depends on securing this supply. The United States has no similar policy because we don’t have state-owned energy companies. Our market-based system faces an uphill battle when competing against countries with state-owned companies.”
And today’s deal involved not one put two state-owned companies.
According to The New York Times, “the deal calls for the supply of nearly 2.5 trillion cubic feet of gas per year via two potential routes originating from Siberia. China has one of the fastest-growing economies in the world and has been searching far and wide for new sources of energy.”
Read the complete story HERE.