Institution has noted that Chinese national energy companies’ parochial interests
often influence major high-level energy policy decisions.^19 It is widely believed
that much of the initial impetus behind China’s ‘‘go abroad’’ oil field acquisition
push actually came from the China National Petroleum Corporation, or CNPC.
While powerful elements of China’s central government advocate ‘‘wellhead to
gas pump’’ control of the oil supply chain, with the idea of shipping Chinese
firms’ overseas oil production back to China, the managers of national energy
companies often operate along more traditional ‘‘market’’ principles. Chinese
oil marketers state that transporting equity oil produced from distant fields back
to China is too expensive.^20 Instead, they favor selling production locally and
acquiring crude closer to home for Chinese use. For example, had the China
National Offshore Oil Corporation, or CNOOC, successfully acquired the
American producer UNOCAL in the summer of 2005, it would likely have
continued selling UNOCAL’s Gulf of Mexico production on the U.S. market
because it made greater economic sense to do so.
On the whole, China’s state shipyards and shipping companies appear to be fol-
lowing the path of its state oil and gas companies. In peacetime, state-controlled
oil carriers will pursue profit. Yet Chinese strategic thinkers believe state-owned
vessels would stand ready to be pressed into service in times of crisis.^21 Potential
flaws in this logic will be discussed shortly.China’s Shipbuilding Industry
Beijing has powerful economic incentives to bolster its shipbuilding sector.
A large-scale shipbuilding program aids domestic shipyards, the steel industry,
and the metallurgical and machine-tool sectors. Judging by recent experience, it
takes Chinese yards approximately 884,000 man-hours to complete each
VLCC.^22 Chinese sources calculate that every 10,000 DWT built can create
100,000–200,000 man-hours of employment for Chinese workers.^23 Fifty-
seven VLCCs are currently on order with Chinese firms. If twenty of these are
undergoing construction simultaneously, this would create some 60 million
man-hours of employment, or enough to employ 20,500 people, full time, for
one year. Thus, on the basis of job creation alone, China’s leadership finds a
strong argument for supporting its shipbuilders.
Chinese ship owners and operators presently control eighteen VLCCs. Most
other vessels in the Chinese fleet are small, old tankers better suited for the
coastal trade than for international oil carriage. Meng Qinglin, a senior manager
of Dalian Ocean Shipping Company, estimates that Chinese tankers are not only
30 percent older than their international counterparts on average but also much
smaller, averaging only 20,000 DWT (as compared to a typical 300,000 DWT
VLCC).^24 Figure 6.2 compares China’s current VLCC fleet to those of other
major oil importers.116 Asia Looks Seaward