Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China and Russia Sign Oil Deal as America Watches From the Sidelines

Politics / China Economy Apr 28, 2009 - 11:46 AM GMT

By: Money_Morning

Politics

Best Financial Markets Analysis ArticleKeith Fitz-Gerald writes: BEIJING, The People's Republic of China - It's Day Two of my three-week trip here, and already I feel myself getting quickly reacquainted with this capital city. If you've never been here, it's hard to do this city justice with simple prose - and without sounding a bit cliché. Beijing - like much of emerging China - is special. And it deserves to be seen that way.


Beijing manages to be simultaneously frenetic and calm, and exudes an energy all its own. There's no telling what's around the corner or whom you'll find here on a given day - literally. For instance, I found an immaculately detailed Ferrari in front of my hotel this morning, played pedestrian "chicken" with a custom Porsche Cayenne SUV in the crosswalk at noon and met world famous actor and Kung Fu legend, Jackie Chan, in the lobby this afternoon.

It's easy to explain why I love this city.

I'm also fascinated by the political, economic and business intrigue that is making China one of the very best profit opportunities of our lifetime. If you want proof, just look at the most recent oil-supply deals that country has reached with Russia.

Energy Deals Assist Cold War Thaw

Not long ago, I wrote about how Russia and China were destined to be global partners when it comes to energy - and noted that it would be the United States that created the incentive for these two former Cold War warriors to link up. In a story published just a few months ago, I described how China's energy foray into Iraq was the initial part of that strategy. Well now it's time for Round Two of this strategy to unfold.

Russia and China recently signed a multi-billion-dollar, intergovernmental agreement to construct an oil line from Russia that will supply oil directly to China. Actually seven agreements in one, the terms depict a deal worth trillions of dollars - including a 20-year oil contract to pump Russian oil to the Chinese market. In return, China has agreed to provide a total of $25 billion in loans to Russian oil companies Transneft and OAO Rosneft Oil Co.

The terms of the contract are fascinating - and illuminating. Russia will provide China with roughly 15 million metric tons of crude per year from 2011 to 2030, with much of the "black gold" flowing through the 1,030-kilometer pipeline that's being constructed to run from the Skovorodino refinery in Eastern Russia to Mohe County in China's Heilongjiang province. It's a branch of the even bigger 4,700 kilometers (2,900 miles) East Siberia-Pacific Ocean Pipeline that's currently under construction.

Additionally, during talks leading up to the oil-supply agreement, both nations talked turkey on such topics as natural gas, nuclear energy, coal, electric power and resource-industry-equipment manufacturing.

Is America Being Relegated to Spectator Status?

What China and Russia very clearly understand (and that the Western countries have totally missed) is that this oil-supply deal is just part of a much bigger strategic drama that's being played out here.

For its part, China believes that the oil pipeline will greatly reduce the risks of its oil imports, the majority of which come through the China's oil imports the vast majority of which come through the Strait of Malacca. (Interestingly, China's nuclear subs were just on parade for the first time ever as part of the 60th Anniversary of the founding of the PLA's Navy in Qingdao, Shandong Province).

Russia, according to Prime Minister Vladimir Putin, believes that an oil pipeline directly to China will give Russia a stable and reliable oil market in the East. Not only will this help Russia access the capital markets, but it can also help that country access hard assets from other sources, tightening Russia's grip on the top energy markets in that region of the world.

Either way, this deal is a game-changer - both for the two countries involved (China and Russia), as well as for those who aren't (the United States, for instance).
And if you take a minute to read between the lines, comments made by leaders on both sides point to a desire to have an even tighter China-Russia relationship in the years to come. This will really lock the United States out of the game, and will also wrest an increasing amount of energy-pricing control from the Organization of Petroleum Exporting Countries (OPEC) cartel - two developments that I've repeatedly warned readers to watch for.

Russian Deputy Prime Minister Alexander Zhukov used surprisingly strong language when he remarked last month that it is highly possible Russia would become China's largest energy supplier in 15 years. China Vice-Premier Wang Qishan noted that the package including all aspects of construction, loans and crude oil trade would become "immediately effective," which is translated literally from Chinese and which means that he's putting the Chinese bureaucratic machine on notice that this is a high-priority project not to be trifled with in any way.

With good reason, energy is a key to both China's ongoing development and to stability in that region. I fully expect to see more deals like this on a variety of commodities and natural resources in the next 12 months to 24 months. View each deal as a sign of a growing regional stability that could contribute markedly to China's growing leadership power, as well as to a global recovery - all of which are important developments for investors looking at this part of the world.

Chinese iron-ore demand creates money-making opportunity for one company… and a few lucky investors… Reconstruction of earthquake damage in Sichuan is shooting the demand for iron ore higher than the total supply in China right now. The country is importing like never before, and using this dry bulk shipper to get the materials there. This company is super cheap by all value measurements, and is poised for a double. See how you can profit by clicking here.

Money Morning/The Money Map Report

©2009 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in