This is a direct result of the skyrocketing US national debt.
(h/t: Fritz Katz)
Oil And Politics: Beijing plays the debt card as the Obama administration quietly lets China acquire major ownership interests in oil and natural gas resources across the U.S. at the same time it blocks the Keystone pipeline.
Normally, foreign investment in the U.S. is to be welcomed. It creates jobs, boosts economic growth and promotes trade and exports.
But when that investor is an ambitious and increasingly belligerent China to whom we owe over a trillion dollars, eyebrows and concerns need to be raised.
Reversing a Bush administration policy, the Obama administration is encouraging Beijing to acquire equity interests in U.S. energy. In 2005, the Bush administration blocked China on grounds of national security from buying California-based Unocal Corp. for $18.4 billion.
That was then, and this is now.
The first Chinese investment occurred in October 2010 with the state-owned Chinese energy giant CNOOC buying a multibillion-dollar stake in 600,000 acres of South Texas oil and gas fields. CNOOC announced that it would pay up to $2.2 billion for a one-third stake in Chesapeake Energy assets.
On the surface, this would seem like a badly needed job-creating investment in a beleaguered domestic oil industry. The question then is why isn’t our own government not only encouraging such investment but also removing further restrictions on American oil and gas exploration and development?
The deal gives China a stake in the Eagle Ford, a broad oil and gas formation that runs largely from southwest of San Antonio to the Mexican border. China also hopes to pick up some American know-how about tapping the hard-to-get deposits trapped in dense shale rock formations. Aubrey McClendon, CEO of Oklahoma City-based Chesapeake, projects that the sale would create as many as 20,000 jobs, directly and indirectly.
Curiously enough, that is the same number of jobs that would be created by the completion of the Keystone XL pipeline from Canada to our Gulf Coast refineries, a project blocked by the Obama administration on environmental grounds.
If Canada cannot ship its crude from Alberta’s oil sands to the U.S., it says it will sell to an eager China.
Along with CNOOC, which is 100% owned by the communist Chinese government, Sinopec Group also is purchasing energy interests in the U.S.
Besides Texas, other Chinese investments include:
• Wyoming: CNOOC has a one-third stake in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.
• Ohio: Sinopec acquired a one-third interest in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.
• Oklahoma: Sinopec has a one-third interest in 215,000 acres in a deal with Devon Energy.
• Colorado: CNOOC gained a one-third stake in 800,000 acres in northeast Colorado and southwest Wyoming for $1.27 billion with Chesapeake Energy.
• Michigan: Sinopec gained a one-third interest in 350,000 acres in a deal with Devon Energy.
• Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale with Devon.
We find it odd that an Obama administration that rails against oil industry profits, blames fossil fuels for planet-threatening climate change, and places vast energy-rich areas off-limits to U.S. oil companies is encouraging Chinese investment in American energy and the transfer of our latest energy-producing technology to them.
“From the Chinese perspective, this is a golden opportunity for them. They have identified shale resources in China, but they don’t have the knowledge or technical expertise to go after those resources,” said Ken Medlock, a fellow at Houston’s Baker Institute and adjunct professor in Rice University’s economics department.
So we will provide them with the technology to develop their oil resources at the same time we restrict our own exploration and development. Maybe this will be the Chinese century after all.
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