In the twentieth century, the global oil industry saw the dominance of a small group of Western companies, known at the time as the ‘Seven sisters', including Exxon, Shell, BP, Total and Chevron. But in the twenty-first century, the global oil industry has been characterized by the rising role of State Owned Enterprises (SOEs), particularly Chinese companies such as the China National Petroleum Company (CNPC), Sinopec, and CNOOC, in addition to the Brazilian petroleum company Petrobras and the Malaysian oil company Petronas. These companies are striving to develop the petroleum industry within their respective countries, either alone or in collaboration with international companies. The Asian companies also began expanding their investments in the global oil industry, in order to secure the largest possible quantity of oil and gas, to be imported to their oil-hungry countries and feed their rapid economic growth. A good example of this is the Chinese companies' current efforts in this regard. The Chinese oil companies are currently operating in all Arab oil producing countries without exception. In addition, it was the Chinese companies that got the lion's share in the two tenders called for by the Iraqi oil ministry in 2009, when the latter opened its giant oil-producing fields to international companies. Last week, CNPC signed an agreement with the Kaz-Munay Gaz Kazakhstani company to import 10 to 15 billion cubic meters of Kazakhstani gas annually, through a pipeline that will be built over 1833 Km and will cost 3.5 billion dollars, to be borne equally by the two companies. The total volume of oil allocated to the Chinese companies in foreign oil fields is approximately 1.5 billion barrels per day, according to the most recent report issued by the International Energy Agency. Why is there such a massive expansion of Chinese companies into the international oil fields then? On one hand, this can be attributed to the high and sustainable economic growth in China, and on the other, to the obsolescence of the oil fields in China and their inability to meet domestic demand. China's crude oil production is estimated at three million barrels per day, against a domestic consumption of eight million barrels per day. China imports around 47 percent of its crude oil demand from the Middle East, according to the International Energy Agency. It is expected that the countries of this region will continue to secure this level of supplies to China in the foreseeable future as well. China also imports crude oil from Africa (Angola and Sudan), in addition to Central Asia, Russia and Latin America. Furthermore, Saudi Aramco has entered into a partnership with a Chinese company and another international company, in a refinery project in China itself. Also, the Kuwaiti Petroleum Company is currently negotiating to enter into a partnership with a Chinese company in another Chinese refinery project. The goal behind these Arab investments in the Chinese markets is to gain access to this huge market, and to ensure supplying it with Arab oil. China also imports natural gas from Qatar, and negotiations are currently underway to sign another contract and increase the volume of gas supplies. Similarly, the Sino-Western economic relations are excellent. In spite of the criticisms we hear from time to time, Western companies invest tens of billions of dollars in the Chinese industry annually, while China invests billions of dollars in U.S bonds. In addition to this economic cooperation, China has demonstrated – if there is indeed a need for it to demonstrate anything – its positive role in cooperating with the other major countries in finding solutions for the recent global economic and financial crises. Nevertheless, the question remains: What about the future? How will China maintain its global oil investments should its relations with the other major countries deteriorate, or even those with its Asian neighbours? Is it possible that China will turn a blind eye to the harassments and challenges to its investments, given its economy's dire need for petroleum, and having invested billions of dollars in this industry? The main question is: How will these strategic investments be protected in a different international climate? How will China put pressure on oil producing countries to protect its investments against other competing major countries? What are the political and economic means available to China to put pressure on one hand and to remain steadfast on the other hand? How will China protect its fleets of tankers sailing the oceans from pirates or from the barges of hostile states? These are not merely hypothetical scenarios. The challenges have already begun – challenges that are still limited and indirect and fall within a narrow range, in the sense that they are not part of a widespread Western policy targeting China. Instead, China's investments will probably be adversely affected by indirect confrontations. But at the same time, it remains important to study the Chinese reactions towards indirect pressures on its petroleum-related investments. For instance, the UN Security Council's resolution and increasing sanctions on Iran by the European Countries and the United States are posing a challenge to the massive Chinese investments in Iran. There is also the referendum in January 2011 regarding the future of Sudan, and the possibility of the secession of the oil-rich South and the Chinese investments there. *. Mr. Khadduri is an energy expert
