[EnemyCombatant]

According to the EIA, the South China Sea has proven oil reserves of around 7.0 billion barrels. China claims the potential for oil discovery in the South China Sea could be as high as 213 billion barrels.

But this geological optimism is not shared by non-Chinese analysts. In 1993-1994, the USGS estimated the total sum of proven and undiscovered reserves in the South China Sea to be around 28 billion barrels. link (Subscription Required)

The good news is that there could be a shitload of oil in the South China Sea. With conservation and a well formulated strategy, this could soften the peak oil crisis. The bad news is that the Chinese want it all for themselves. I don't think sharing is one of their values.

This explains why the US is trying to prevent China from annexing Taiwan. I had been wondering why the two military super powers would ruffle their feathers over Taiwan. We should watch this one closely.

Does anyone know if the reserves there are closer to the 213 billion or the 23 billion?

[0mar]

Not completely sure but I think its closer to 28 billion barrels than 218 billion barrels.

If we take ASPO's model as depicting a crash, then South China will do nothing. It's already accounted for.

[abelardlindsay]

News

　SHANGHAI, Aug. 18 (Xinhua) -- Shanghai Petroleum Exchange, China's first bourse for the spot transaction of oil products, formally opened for business on Friday. The exchange started with gasoline and will trade bitumen, methanol and glycol in the near future, said sources with the bourse.

In the long run, the exchange will launch other petroleum and chemical products including crude and refined oil and liquefied gas. China's petroleum market would see consumption of crude and refined oil accelerate this year, said Gong Jinshuang, senior engineer with the research institute of China National Petroleum Corporation, the country's largest oil producer.

Total net imports and output of crude oil in the first half of this year were 161.99 million tons, up 8.2 percent over the first half of last year, and that of refined oil products was 96.85 million tons, up 19.2 percent, said Gong. China's crude oil output totaled 91.66 million tons in the first six months, a 2.1-percent rise on the first half of last year, according to China Petroleum and Chemical Industry Association.

In the first half, the country produced 84.82 million tons of refined oil products, up 5.6 percent. The General Administration of Customs said net imports of crude oil were up 17.6 percent to 70.33 million tons from January to June, and that of refined oil products rocketed 48.3 percent to 12.03 million tons.

[americandream]

Typical Chinese pragmatism compared to the theological high jinks of these Islamic paper tigers.

Why the fook do you clowns give these Islamic jokers the time of day, I will never know.

[whereagles]

Are chinese pragmatic? I didn't have that idea.. it always looks to me as if they let a decision maturate for 50 years or so...

[Petrodollar]

...just an fyi...

http://www.blah3.com/article.php?story= ... 9185557200

Hmm.. China Has Launched An Energy Bourse...

Saturday, August 19 2006 @ 06:55 EDT
Contributed by: Monkeyfister
Views: 51

This will change things. To think we were worried about the Iranian, and Russian Oil Bourses...

--------------------------------------------------------------------------------
Fledgling Shanghai oil exchange reports robust trade

Shanghai Petroleum Exchange, China's first commodity and futures exchange for oil products, reported robust trade on Friday, its first formal business day.



Friday's transactions of gasoline, which is among the first products to be traded on the exchange, totaled 72,120 tons and were valued at 253 million yuan (31.6 million U.S. dollars), the bourse's general manager Chen Zhenping told Xinhua.

Futures trading was brisk for October and November and the three biggest deals alone totaled 51,460 tons, 71.4 percent of the total, he said.

Yet bidding prices were stable on Friday and the difference between the highest and lowest bids was 60 yuan (7.5 U.S. dollars) per ton, said Chen.

The exchange started by trading gasoline and will also trade bitumen, methanol and glycol in the near future. In the long run, it will launch trading in other petroleum and chemical products including crude and refined oil and liquefied gas.

The exchange has signed deals with 65 traders, ten warehouses and two banks.

Insiders say two overseas oil giants have set up branches in China to trade on the Shanghai Petroleum Exchange but their identities have not been disclosed.

With the increasing participation of international petroleum groups, China is getting more prepared to fix oil prices on its own, said Ma Weifeng, a researcher at Shanghai-based Tongji University.

--------------------------------------------------------------------------------

Yeah... I really don't see us winning a bidding war with the Shanghai Bourse. China holds over $140Trillion of our debt. And China is right there, flush with cash, in Asia, near the Oil and NatGas supplies, and the Machine to back up it's claims. Friday was not a good day for America. We're going to feel this about six-months from now.

I do wonder who the "two overseas oil giants" are... I suspect BP, and Royal Dutch-Shell... maybe Exxon, but they're too CIA, too US-Owned... maybe it might be Exxon... Then again, it might be Venezuela... Let's stay tuned, eh?

...indeed, I found this particular sentence interesting...

"...China is getting more prepared to fix oil prices on its own."

...Hmmm, in the fallout of the massive China Aviation Oil (CAO) scandal from late 2004, is China becoming strategically interested in having some influence re oil prices via the Shanghai bourse? Trades via the Shaghai bourse are dollar-denominated as far as I can tell, and likely will remain so for some time - but this opens the door for a potential "basket of currencies" for oil prices and oil transactions in the future - should Bejing follow the path being pursued by Tehran and Moscow....

For some backdrop, I recently read an interesting statement by the former CEO of China Aviation Oil (CAO) company just a few days before he was forced to resign over millions lost in oil trades derivatives...the topics he addressed were "hedging" and dollar-based oil prices vis-a-vi the singapore currency...

http://www.comsoc.com/news33.html

BT CEO's e-Club : Topic "The Art of hedging"

The Business Times, 8 November 2004

(excerpt)

OIL prices are almost always denominated in US dollars. Oil companies therefore have a natural long position in US dollars and are vulnerable to a weakening in that currency.

In China Aviation Oil's case, revenue and commissions for our procurement business are denominated in US dollars, while many operating expenses are in Singapore dollars. A fall in the US currency relative to the Singapore unit therefore raises costs. As well, China is our main customer, and with its pegged currency, a weaker dollar raises the cost of imports such as oil, and puts pressure on enterprises and consumers to use less. {note: this dynamic has changed since China de-pegged from the dollar in July 2005}

It must be noted, however, that oil companies have been dealing with a weaker dollar for some time. The US dollar has been weakening against the euro and the yen since early 2002. Indeed, one of the major reasons oil prices have risen in dollar terms has been the weak currency. Because the US dollar is the currency of choice for oil transactions, this has had the effect of reducing effective costs to countries with currencies not pegged to the US dollar. {i.e. UK, eurozone, Japan, etc.} This, in turn, has helped oil demand remain quite robust, to the extent that the benefits of volume growth have exceeded the costs of a weaker dollar. We see this most readily in the positive financial results being reported by most oil companies in Singapore and around the world.

So while there is a clear and direct concern facing oil companies from a weaker dollar, there is also a less obvious, but just as important, gain in the business's overall demand.

- Chen Jiulin
Managing Director
China Aviation Oil

...and during that same month, November 2004, Mr. Chen Jiulin was forced to resign after it was exposed that he had lost $550 million in oil trade derivatives...initially betting that oil prices were going to drop...and I should note that the market value of CAO was only $570 million at the time. CAO supplies 1/3 of all avaition fuel to China's airlines, and creditors had to rush in to save the company from bankruptcy. Here's the outcome for Chen...

CAO's ex-CEO jailed for over 4 years
(Reuters)
Updated: 2006-03-21 12:29

SINGAPORE - The former head of jet fuel trader China Aviation Oil (Singapore) Corp. was sentenced to 4 years and three months in prison on Tuesday for his role in the city-state's biggest trading scandal since the collapse of Barings Bank in 1995.

Chen Jiulin, 44, a Chinese national, was also fined S$335,000 ($207,400) for his role in concealing trading losses of $550 million from betting the wrong way on oil prices. The losses brought Singapore-listed CAO to the brink of collapse in 2004.


Chen Jiulin, the former chief executive of China Aviation Oil (Singapore) Corp., arrives for his hearing at the subordinate court in Singapore in this March 15, 2006 file photo. [Reuters]

Chen was Chief Executive of CAO from 1997 until his suspension from the job in November 2004. He had admitted to six out of 15 charges last week, including making false or misleading statements, failure to inform the Singapore exchange of CAO's losses, conspiring to cheat Deutsche Bank, and procuring CAO's parent firm to commit insider trading.

The CAO scandal -- the worst to occur in the Southeast Asian financial centre since Singapore-based rogue trader Nick Leeson brought down Barings nearly a decade earlier -- was especially sensitive for the tiny city-state because of CAO's Chinese parentage and management.

Singapore has tried to attract mainland Chinese companies to list on its exchange, while government-linked investment firms such as Temasek Holdings and the Government of Singapore Investment Corp. have been big investors in China.

So, given all this backdrop, it would appear that not only are Russia and Iran interested in exerting some influence in the international oil trade prices (& currencies) - but China has also joined the fray to a limited degree. Washington, New York (NYMEX) and the City of London (ICE) are most likely not amused by these developments as this does not portend well for dollar hegemony....

[Dreamtwister]

The exchange has signed deals with 65 traders, ten warehouses and two banks.

Insiders say two overseas oil giants have set up branches in China to trade on the Shanghai Petroleum Exchange but their identities have not been disclosed.

Does everyone now see what happens when you bend over for a corporation?

It doesn't matter how fast you grab your ankles, they will screw till you're sore and leave as soon as they get a better offer.

[ChineseTurtle]

Just wanted to let you know, browsing the net in China and doing a search of google.cn with the term "peak oil" returns peakoil.com in fifth postion on the list.

Using Baidu - China's "Google" - doesn't return Peakoil.com for several pages.

Having an excellent trip so far. I'll be back in the states in another week.

[Aaron]

http://www.peakoil.com/fortopic23751.html

[FreakOil]

China's top oil producing and offshore oil companies simultaneously unveiled major discoveries yesterday. PetroChina announced it had discovered a "very rich" oil field at Bohai Bay the biggest in China in the past decade while CNOOC said it has an "exciting find", also in Bohai Bay. The PetroChina discovery, along with a new huge gas field the company discovered recently in Sichuan Province, will significantly improve the capacity of the country's biggest oil producer. With an initial daily output of 500 tons (3,700 barrels), the Bohai Bay field is "the largest find in China in 10 years," Jiang Jiemin, vice-chairman and president of PetroChina, told a press conference in Hong Kong yesterday. He did not elaborate on the total reserves of the Bohai oil field.

- Xinhua News Agency

This seems like an awful lot of hype for such small output. 3,700 bpd is more like a dribble than a "very rich" find. But it seems like this is what we have to look forward to, a lot of small fields offshore or in other hard-to-reach places. Are such fields even worth tapping at today's oil prices? What I'd like to know is, are people in other parts of the world seeing similar news items, that is, a lot of hype over small finds? And what sort of effect do these news items have on the public?

[Twilight]

I'm seeing the same thing every week, luckily it tends to be confined to the newswires and never gets picked up by the media. Someone finds a 50 MB field somewhere and gets all excited. Fair enough, often it's a small company and they benefit from the attention the newswire release gives them. But boy do I hate those rare occasions when a newspaper gives it several column inches in the business pages and sexes it up so much the author of the original press release would have blushed. So the public reads:

THEY HIT THE BIG TIME! FIFTY MILLION BARRELS! THAT'S A LOT OF OIL!

Nubs.

It's the same when people boast about drilling 3000m beneath the ocean surface or hammering in piles in some salt flats surrounded by 200m high dunes. Well done, have a cookie. But off the record, you're getting desperate, aren't you?

Maybe I'll live to see the day when people get excited about finding naturally-occurring asphalt. Then we'll be back full circle, 200 years later.

[nth]

Remember the number is for one well, so the actual field is larger. I would not call this a new discovery because they already discover oil in that area. It is same with the Jack field. I would not call Jack#2 a significant discovery as they already discovered that field with the Jack#1 well.

The article is so misleading. China is not depending on Bohai fields to compensate its decline in Daqing field- one of the top 10 fields in the world. China is counting on expanding its production in the Western China region to compensate declines. US news don't pick up their activities in that region. I find it quite odd. They are drilling like crazy there.

[p1carr]

I am looking for locational information on off shroe Chinese Oil Refineries in the Florida Straits. Any information would be appreciated.

[simyansun]

Hello, Everyone!

I am new to this forum, so greetings from Borneo!

Interested to know if anywhere I could find information on the production cost of 1 barrel of crude oil in CHINA?

Thanks!

[Graeme]

Peak Oil: China vs. USA

As I wrote in my last SeekingAlpha article, HR 1835 – The NAT GAS Act of 2009, was introduced on the floor of the House last week. It is exactly what the US needs in order to strategically counter Chinese moves to lock up worldwide oil supplies. This is a bipartisan bill and no, its not just Oklahomans and Texans! There are representatives from Colorado, Georgia, California, New York, Idaho, Hawaii and Florida (among other states) supporting and co-sponsoring this bill. Don’t wait for energy executives, Obama, auto manufacturers, or natural gas utility executives to place ads on TV supporting this bill – although they should be! Write a letter to Obama - demand that he not only support HR 1835, but accelerate its passage through committee to his signing it into law. You might also advise Obama to stop his idiotic support for “clean coal”.

The US’s 2.1 million mile natural gas pipeline grid is our country’s most strategic weapon in the war on peak oil and foreign oil imports. The grid is connected to every major metropolitan area and to 63,000,000 homes where over 100,000,000 cars and trucks could be refueled every night while their owners sleep. It can easily be supplied with America’s most abundant, clean, and cheap fuel: natural gas.

The US is bankrupt, so we can’t go around the world purchasing oil reserves like China is doing. So, we have a choice – we can either:

a) sink into to economic ruin or

b) solve our energy crisis using the only US fuel that is abundant, cheap and clean: natural gas

If energy executives are correct that worldwide oil supply won’t meet worldwide oil demand by 2015, we have no time to waste.

http://seekingalpha.com/article/130258-peak-oil-china-vs-usa

[Graeme]

Mods, Please move this post to this thread.

http://peakoil.com/current-events/house-members-plan-bill-to-expand-ngv-use-t52267.html

[The_Toecutter]

Natural gas production will also soon peak; using it to directly fuel an internal combustion engine, when an electric drive system would be nearly twice as efficient well to wheels even factoring in power plant and transmission losses is short-sighted. Wasting natural gas, which is a valuable feedstock for fertilizers and various industrial chemicals, on transportation altogether, is also short-sighted and wasteful.

The Pickens plan gets lots of attention by politicians and media because it will keep centralized control of energy in place. What we need more than ever to ebb the effects of this crisis is energy diversity and decentralization; we need to find ways to have J6P produce some of his own fuel and energy; they exist and would bee used if given sufficient backing, but the energy conglomerates would prefer to see us go the route of Mad Max than for them to lose their profit making potential and their grip upon society.

One thing China's industry is doing that America's industry isn't is getting an affordable PHEV to market; labor costs do factor in to this a lot, but sheer production volume, much more so. Too bad China is more screwed than we are, especially with regard to food!

[shortonoil]

The_Toecutter said:

The Pickens plan gets lots of attention by politicians and media because it will keep centralized control of energy in place. What we need more than ever to ebb the effects of this crisis is energy diversity and decentralization; we need to find ways to have J6P produce some of his own fuel and energy; they exist and would bee used if given sufficient backing, but the energy conglomerates would prefer to see us go the route of Mad Max than for them to lose their profit making potential and their grip upon society.

Toe I am 100% sure that you are correct. I’ve been watching the conglomerates destroy local electrical production systematically for 30 years. Often times with absolutely no logical economic reasons, except to insure that concentration of production is totally, and always will be completely in their hands.

Unfortunately, I don’t think the plebes are going to catch on until the day the lights go out. Most people have more care for their neighbors’ dog than 90% of corporate America has for the people they serve.

[Graeme]

Natural gas production will also soon peak; using it to directly fuel an internal combustion engine, when an electric drive system would be nearly twice as efficient well to wheels even factoring in power plant and transmission losses is short-sighted. Wasting natural gas, which is a valuable feedstock for fertilizers and various industrial chemicals, on transportation altogether, is also short-sighted and wasteful.

The Pickens plan gets lots of attention by politicians and media because it will keep centralized control of energy in place. What we need more than ever to ebb the effects of this crisis is energy diversity and decentralization; we need to find ways to have J6P produce some of his own fuel and energy; they exist and would bee used if given sufficient backing, but the energy conglomerates would prefer to see us go the route of Mad Max than for them to lose their profit making potential and their grip upon society.

One thing China's industry is doing that America's industry isn't is getting an affordable PHEV to market; labor costs do factor in to this a lot, but sheer production volume, much more so. Too bad China is more screwed than we are, especially with regard to food!

Thanks for your response! I have a great deal of sympathy for your ideas. But as an initial response to peak oil, I think the authors (and Pickens) suggestion is likely to be the best part of a range of strategies including introducing biofuel and PHEV's. Natural gas as a fuel could be phased out as alternative means of transport begin to dominate and become affordable to more people. Microgeneration also is likely to become gradually more popular as prices for home-energy technologies falls.

[TheDude]

Drillers are succeeding in tapping unconventional NG in North America for now, but questions remain as to whether they can boost the rig count back when demand rebounds, in a credit-poor business environment. Like the question of whether they'd be able to drill enough wells in the first place this is uncharted territory. The gas rig count is down 51 percent since September. Attempting to shunt over NG to the vehicle fleet while coordinating replacement of power production by wind at the same time always seemed like asking too much of industry, unless done at a glacial pace that could as well be implemented with incentives.

In fact, given how screwed up the auto industry is at the moment you may likely see your scenario come to pass, Toecutter. Perhaps you've heard some of the anonymous stories about GM: General Motors in 'intense' bankruptcy preparations

General Motors Corp is in "intense" and "earnest" preparations for a possible bankruptcy filing, a source familiar with the company's plans told Reuters on Tuesday. A plan to split the company into a new company made up of the most successful units, and an 'old company' of its less-profitable units is gaining momentum and is seen as the company's best configuration for the future, said another source familiar with the talks. The sources asked for anonymity saying they were not authorized to speak on the record. GM Chief Executive Fritz Henderson has said the company prefers to restructure out of court but could go to court if needed. GM declined to comment further.