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A recent news item in Beijing Time reads in relevant part:|
" VISIT to China next week by Saudi King Abdullah bin Abdul-Aziz is expected to give impetus to a deal to establish a multi-million-ton oil reserve base in south China, the Beijing Morning Post reported today.
At the end of 2002, Haikou Gaofeng Refinery signed a memorandum of cooperation with Saudi Arabia, which included an oil reserve project and a 6-million-ton refining project.
In negotiations last year, Saudi Arabia agreed to reduce its holding to 51 percent, the source was quoted as saying.
Saudi Arabia's plan to set up an oil reserve base in south China is expected to boost its sales in Southeast and Northeast Asia."
The advantage of having an oil reserve is obvious. In time of war or embargo, the reserve would tide the nation over the period. Both Japan and the U.S. have huge strategic petroleum reserves.
From the security standpoint, it can be claimed that it is actually better to have at least part of the reserves owned and funded by a major oil producer such as the Saudis. In time of conflict, they can warn any third party against trying to attack or destroy the reserves (which belong to the Saudis, even though they are on Chinese soil), at the pain of getting an offset against the third party's holdings in Saudi Arabia. That should enhance the security of the reserve in times of military conflict.
Better yet, the concept should be pushed further, and China should invite the bigger oil producer nations to each keep a reserve in China, to serve the Asian markets. Think about it - if the Saudis, Russia, Venuszuela, Iran, Sudan, etc. etc., all have their oil reserves on Chinese soil, the American majors would be fearful that they could be shut out of the lucrative market, and would beg to do more.
I do not know if a natural gas reserve can also be financially viable, in view of the costlier (refrigeration) facilties required. If Australia would put up a natural gas reserve, it'd be even better.
[ Last edited by tongluren at 2006-1-21 09:27 AM ]