Is it possible for the US to cut into Chinas oil gas import routes

China is the world's largest importer of oil  gas,  the US Navy controls all the sea lanes, but we don't have to worry about oil  gas being jammed.

People in  out of the industry have probably noticed that on May 28 this year, major Chinese leaders stressed in their speeches at the 10th National Congress of the China Association for Science  Technology, "We must adhere to the problem orientation in tackling key scientific  technological problems  pursue the most urgent  pressing issues.  the country's immediate  long-term needs, oil  gas, basic raw materials...  other key core technologies, accelerate the breakthrough of a number of... Key core technologies."

It is the first time in a leader's speech  report that "oil  gas" is placed at the top of the list of urgent scientific  technological problems to be solved, which shows that the central government attaches great importance to the "necked" technological problems in the oil  gas industry. The reason behind this is that if the bottleneck technology is  solved, domestic oil  gas production  supply will  increase,  economic output will  be improved. Its deeper meaning is that in the context of the game between great powers  the strategic competition between China  the United States is becoming more  more intense, the high-level officials are paying attention to China's energy security, especially the high dependence of oil  natural gas on foreign countries,  are worried about the risk of possible "supply interruption".

In China, energy security is more often expressed as oil  gas supply security. China's energy endowment is "rich in coal, short of oil  short of gas",  the development space of new energy is large. There is basically no need to import coal,  non-fossil energy sources such as solar power  nuclear power have great potential for development in the context of accelerated energy transition. In recent years, however, more than 60% of the supply of oil  natural gas, which has accounted for 28% of the total primary energy consumption (about 3.5 billion tons of oil equivalent), has to be imported.

According to the 2021 BP Energy Statistical Report just released on July 8, in 2020, China consumed 669.2 million tons of crude oil  330.6 billion cubic meters of natural gas,  produced 194.8 million tons of crude oil  194 billion cubic meters of natural gas. The dependence of crude oil  natural gas on foreign countries reached 70.9%  41.3%, respectively. Concern about energy security, especially the security of oil  gas supplies, continues to grow,  the highest levels of government down to the common people.

As we all know, since 2012, the second phase of the Obama administration, the US has adjusted its foreign policy  gradually treated China as a "strategic competitor". Since Trump took office, especially after the release of the NATIONAL Security Strategy report in 2017, the US has completely changed its position on China. In 2018, the two sides started a trade war, followed by a technology war, with the US clamping down on Huawei  other Chinese technology companies going crazy,  then hundreds of Chinese companies were blacklisted by the US Department of Defense  Treasury,  treated harshly by the US as "Chinese military enterprises". So far, high-level exchanges between China  the United States have been suspended,  track ii dialogue has been difficult to carry out. Relations between China  the United States have plunged to their lowest point since the two countries established diplomatic ties.

But careful watchers may note that in the nearly half century since Kissinger's secret 1971 trip to China, there has  been a "conflict" between China  the US over energy  energy supplies. Since China became a net importer of 1993, nearly 40 years, safe supply of oil  gas has been reused component of China's economic security,  the growing importance, survived the sino-us relations during the period of low  sensitive period (such as 1995, 1999, 2009), but the basic did  take our energy security issue. Even in 2017, as relations between China  the United States continued to weaken, the United States did  lock us in on oil  gas imports  trade,  on oil  gas transport routes by sea  land.

Why is this? Is the U.S. strategic community failing to appreciate the importance of energy security to a rival like China?  do you think it's  the right time? Neither. Us strategists have studied energy security far more deeply than their Chinese counterparts. So why has the US been slow to play the "energy security card" with China? In other words, the external environment of China's energy security has  deteriorated because of the intensified strategic game between China  the United States! There may be several reasons.

The "structure" of the external environment of China's energy security has changed substantially

Since the second world war, the US has been the world's largest consumer  importer of oil. Ensuring overseas oil supplies  energy security has long been a priority of U.S. foreign policy. To this end, the United States has invested enormous resources to ensure basic stability in the Middle East, Central Asia, the Americas  Africa,  projected military power by deploying troops in key waterways passed by the world's largest oil tankers. At present, the world's seven major oil  gas transportation chokepoints (such as hormus Strait in the Persian Gulf, Malacca Strait, Bosphorus Strait, Mande Strait, Suez Canal, etc.) are mostly controlled by the United States. In the era of globalization, the United States, while providing public goods for other oil  gas importers, is more important to protect its own energy security channel. Major oil  gas importers such as China, India, Japan  South Korea have been enjoying public goods provided by the United States.

China has been the world's second largest oil importer for a long time. In 2018, China surpassed the United States to become the largest oil  gas importer. In order to ensure national energy security  actively participate in the needs of globalization, China's large energy enterprises began to "go out" to expand overseas investment  trade markets. Before 2010, China  the United States competed,  competed rather than cooperated, for access to overseas oil  gas resources. Major economies such as China  the United States, Europe, Japan  South Korea,  rising star India were the main buyers, while resource countries such as the Middle East, Russia, Latin America  Africa were the main sellers, competing for the "cake" of oil  gas market, which was the "structural" feature of global energy in that period.

But this structure has broken down in the past decade, thanks to the rise of the SHALE oil  gas industry in the US. The success of the shale revolution has enabled the United States to achieve its once-distant dream of "energy independence," has restored the country to its position as the world's no. 1 producer of oil  natural gas,  has transformed the COUNTRY  an importer to an exporter. In 2019, the U.S. produced 681.5 BCF of shale gas, 74% of total production of 920.9 BCF; Tight oil production, dominated by shale oil, was 374 million tons, accounting for 50 percent of total production of 747 million tons. Experts predict that by 2030, the United States will become the world's third largest oil  gas exporter, after Russia  Saudi Arabia. Naturally, U.S. oil  gas exporters cannot afford to ignore the Chinese economy, which is growing steadily  the world's largest oil  gas importer. Therefore, China  the United States in the field of energy  "competitors" to "collaborators", showing a strong complementary relationship. During President Trump's visit to China in November 2017, China  the US signed energy cooperation deals worth more than 250 billion US dollars, which are still fresh in our minds. One of the most notable achievements is the execution of a $10 billion purchase  sale contract between PetroChina  Chenier, a major U.S. LNG exporter.

It can be said that the "structural" changes in the global energy market brought about by the success of the US shale revolution are one of the important reasons why the US has  played the "energy security card" against China.

02 The United States will  give me a hard time on energy security

Let's try to analyze this  an American perspective.

One is that it doesn't.  the US's point of view, it does  need to engage in a massive head-on confrontation with China over oil  gas supplies, which would risk withdrawing  East Asia  the South China Sea altogether. Since World War II, the United States has worked to remain a global superpower, ensuring sole, exclusive strategic deterrence  influence around the world. If the US risks cutting off China's overseas oil  gas supplies, it will inevitably provoke a direct conflict with China,  even a war. If the US does  win the war, even if it draws a draw, this will lead to the WITHDRAWAL of the US  East Asia  the South China Sea. The United States had to be transformed  a global superpower into a regional power retreating to the Atlantic (3.460, -0.03, -0.86%), leading to a weakening of the United States.

At the same time, the U.S. should  cut off oil  gas supplies to Its Allies such as South Korea, Japan  Taiwan by cutting off oil  gas supplies to China. It is  worth cutting off oil  gas supplies to China while cutting off the main source of revenue for pro-AMERICAN oil producers such as Saudi Arabia, Qatar, Kuwait  Iraq,  European oil majors such as BP, ExxonMobil  Shell.

Two is  stuck. I believe that after a careful assessment, the STRATEGIC community in the United States will conclude that the real situation of China's energy security is "sensitive" but  "fragile" (for details, see the May 2018 post of Clearspring Energy: China's Current energy security: "Sensitive" but  "fragile"). Although China's oil dependence is as high as 70%, due to its rich coal resources, China's energy dependence is  high at less than 15%. In other words, China has always taken energy security firmly in its own hands. Even oil, with China's domestic oil  gas exploration  development action plan "" seven years execution effect, domestic oil production is still a long a period in the future, 200 million tons of gas peak output will reach 240 billion square, the production  supply level basically met the extreme cases, China oil gas demand in key areas. In other words, although China's oil  gas supply security is sensitive, it is  vulnerable enough to use additional strategic forces  cede core interests to safeguard it.

Moreover, through nearly 20 years of efforts, China has in the northwest, northeast, southwest  build up the east sea "diversity" of oil  gas imports  trading system, Chinese energy companies have been deeply involved in the Middle East, Africa  central Asia  other regions of the oil  gas resources development  cooperation, that is to say, China's current variety of overseas oil  gas supply system is rather "toughness". Even if the United States succeeds in cutting off China's offshore oil supply channel, it cannot completely cut off China's oil supply.

Third, overseas oil  gas supply is  an "ace in the hole" for the US to contain China. To fight  contain China, the US has many better cards to play than oil  gas. Like Taiwan, like the South China Sea, like chips  high-tech. In the era of information, intelligence  post-industrialization, the strategic  political nature of oil  gas has greatly diminished. In the view of the US, oil  gas supply is  yet a "killer" weapon to contain China.

The long-term "buyer's market" of global oil  gas supply  demand gives "reassurance" to China's energy security.

In fact, the loose supply  demand pattern has  changed since oil prices collapsed in the second half of 2014  the global oil  gas market entered a new cycle. In other words, oil  gas have been in the "supply surplus" of the low business cycle. Coupled with the continued spread of the global epidemic since 2020  the remarkable economic recovery brought about by China's effective control of the epidemic, China's oil  gas consumption market has become the target of the world's leading oil  gas exporters.

Take Saudi Arabia for example. On March 21, at the "2021 China Development Forum" held by the Development Research Center of The State Council, Amin Nasser, CEO of Saudi Aramco, one of the world's largest oil companies, said in a video link: "Ensuring the sustainable security of China's energy needs is our highest priority,  just for the next five years, but for the next 50 years  beyond." This should be the first time that Saudi Aramco, one of the largest oil exporters to China, has made such a "geeky" statement. This is certainly  a whim of Mr. Nasser. The obvious reason is that supply  demand in the global oil market dictate that Saudi Arabia must be bound to the Chinese market. The United States has become energy independent, Europe's use of oil is falling sharply, India is a big importer but  yet a big one,  Who else can Saudi Arabia sell its oil to if  China?

It is  just Saudi Arabia, Russia, Iraq, Iran, Venezuela, Turkmenistan, Qatar  other big oil  gas exporters to China all share a similar mentality. Oil  gas have long accounted for about 70 percent of exports, with Iraq at one point exceeding 90 percent. Oil  gas exports account for about 30 per cent of GDP in Iraq,  nearly 50 per cent in Iraq. Oil  gas revenues remain the lifeblood of these countries,  China is their savior.

Moreover, with the acceleration of the energy transition, fossil energy is no longer attractive,  the value of oil  gas resources is rapidly "withered", which can be seen  the phenomenon that the market value of global oil companies is stagnating  even significantly shrinking in recent years. The world's key oil producers  exporters are also actively adjusting strategies, so that the country's underground resources as soon as possible "cash" is the best strategy, otherwise, there is no shop after this village.

Energy transition  carbon neutrality drive a change in the focus of competition between China  the US in the energy sector

According to a series of actions taken by the new Biden administration this year, "energy-climate" diplomacy has become a strategic pillar of the United States to reinvigorate its global leadership. It has also become a new area for the United States to suppress  compete strategically with China.

It can be seen that the response to the global climate crisis has become one of the important foreign strategic  security issues of the Biden administration. Joe biden, the government will "energy - climate" included in the category of senior politics,  climate change policy through to the United States international trade policy, foreign policy formulation,  the long-term strategy of maintenance of the international competitive advantage,  the strategic height of national security to  participate in global climate cooperation, set a higher climate goals, Give climate diplomacy more strategic significance. At various diplomatic occasions, Biden repeatedly stressed that the United States should lead the global clean energy revolution. By returning to global climate governance  using international multilateral cooperation, the United States tries to influence  dominate its Allies, partners  other countries,  regain control  establish its voice in global climate governance  low-carbon economy.

It is foreseeable that in the context of energy transition  carbon neutrality, the United States will  only impose more stringent requirements on China's carbon emissions, but also may use environmental standards to set up obstacles, creating problems  obstacles for China's overseas investment  cooperation. For example, the "low carbon" brand is taken as an important means of strategic competition between China  the United States, especially targeting China's international cooperation under the belt  Road Initiative,  attacking the coal  power projects invested  built by Chinese enterprises overseas.

To sum up, in the field of traditional energy security, the situation faced by China has  worsened due to the intensified strategic game between China  the United States, but the overall situation has changed to a more optimistic direction. As long as the objective factors  boundary conditions analyzed above do  change, China's oil  gas security supply tension will continue to be relieved. On the energy transition  climate change, we will have a real fight with the United States.

Of course, some countries have been coveting our traditional energy security "weakness"  have been trying to use it to contain us. India, for example, has been trying to make trouble for the 21st Century Maritime Silk Road  the maritime oil  gas transport corridor with its influence in South Asia  the Indian Ocean region. I had to take action against it. In fact, There is a lot of room for cooperation between China  India in ensuring national energy security. However, the confrontation between India  China brought by India's provocations has allowed the "Asian premium" to succeed repeatedly, making some resource countries  the United States  western countries laugh.

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Source: International gas network