Interview: Angola Says China, West in Fair Fight for Oil

BEIJING, Nov 6, 2006 (Dow Jones Newswires)

Angola won't pander to Chinese interests and ditch its open-door policy for foreign investors in its oil industry, despite overtaking Saudi Arabia to become Beijing's number one supplier of crude, a senior Angolan government minister said Monday.

Angola has been carefully cultivated by Beijing as its insecurity grows over energy supplies with around $3 billion in loans being offered by policy lender Export-Import Bank of China to rebuild infrastructure such as dams and railways that were shattered during a decade-long civil war.

This has prompted fears among Western countries and particularly the U.S., which imports nearly 500,000 barrels a day of oil from Angola, that China is using soft loans to secure coveted oil assets in Africa.

In June, China Petrochemical Corp., better known as Sinopec Group, agreed to pay $692.2 million for stakes in three deep-water blocks in Angola at the same time as committing to build an oil refinery there to help the African country meet domestic demand for oil products.

This pattern of investing in infrastructure at the same time as securing preferential access to oil blocks has been replicated elsewhere by the Chinese in Africa, notably Nigeria - the continent's biggest oil producer.

However, Vice Minister of Foreign Affairs Georges Rebelo Pinto Chikoti said the increasingly close cooperation with China - led by Angolan oil exports rising 45.6% on-year between January and September to 490,000 b/d - didn't mean Beijing had gained extra sway over energy policy.

"As far as oil is concerned we are an open market," Chikoti told Dow Jones Newswires in an interview on the sidelines of the China-Africa summit in Beijing.

"We have more than 30 companies working with Angola and prospecting for oil so there will be no preferential treatment."

According to estimates by the U.S. Department of Energy, Angola had proven crude oil reserves of 5.4 billion barrels at the start of this year and natural gas reserves of 1.6 trillion cubic feet.

Western companies with oil interests in Angola include Total SA (TOT) of France, Exxon Mobil Corp. (XOM) of the U.S., Britain's BP Plc (BP) and Norway's Statoil ASA (STO) and Norsk Hydro ASA (NHY).

But the importance of Angola to China is underlined by the fact that it accounts for 20% of all two-way trade with Africa, which is expected to surpass the $50 billion mark this year.

In the first nine months of 2006, bilateral trade totaled $9.3 billion, and the Chinese Ministry of Commerce forecast recently that it will exceed $10 billion over the year as a whole.

Chikoti said Chinese investment was valuable in helping Angola develop its agriculture and for construction projects from roads and railways to schools and hospitals.

Angola is also set to benefit from an assistance package unveiled by Chinese President Hu Jintao on Saturday, including raising the number of export items to China receiving zero-tariff treatment from least developed countries in Africa to more than 440 from 190.

African countries were also offered billions of dollars in loans, a pledge to double aid to the continent by 2009, and the cancellation of large tranches of debt.

China is sensitive to the charge that it is treating Africa like a colonial territory and supporting regimes with poor human rights records. Many commentators have noted the stark difference between China's policy of noninterference with attempts by foreign lenders to secure better governance in Africa by making their loans conditional.

Li Zhaoxing, China's foreign minister, told a press conference at the conclusion of the summit Sunday that accusations of his country's energy policy were misguided as China's oil imports only account for 6% of all oil traded globally.

"China does not seek a monopoly of oil resources. We do not seek to influence Africa's oil policy toward other countries," Li said.

The view of an African continent whose energy resources were becoming increasingly dominated by China was also rejected by Chikoti, who said the partnership worked well and Africa needed a diversity of customers for its natural resources just like the West.

"If you were to look at how much oil we sell to the U.S., the volume is very big, but it would be wrong to say that we should be afraid of the U.S.," he said.

"I think we should all be positive about the future in terms of international relations and should not (pillory) China for things that it has not done. It would not be fair."

The U.S. remains Angola's main trading partner and this is unlikely to change in the near future despite the soaring growth of China's crude imports, Chikoti said.

The decision by the administration of George W. Bush to make Angola eligible for tariff preference under the African Growth and Opportunity Act (AGOA) in January 2004 was also a spur to bilateral ties that would help reinforce the edge that the U.S. has over the Chinese, he said.

Copyright (c) 2006 Dow Jones & Company, Inc.


Our Privacy Pledge

Most Popular Articles

Brent Crude Oil : $51.38/BBL 2.44%
Light Crude Oil : $50.43/BBL 2.26%
Natural Gas : $3.14/MMBtu 0.94%
Updated in last 24 hours