China is hosting this week foreign ministers from major oil producers and exporters in the Middle East to discuss boosting energy ties and a possible free trade agreement, while Beijing is concerned with the unrest in central Asian oil producer Kazakhstan.
More than 160 people were killed in Kazakhstan in one week of unrest during protests that affected production at the country’s largest oilfield, Tengiz, operated by Chevron.
The U.S. supermajor said on Sunday that production at the oilfield was gradually being restored to its usual volumes, following several days of curtailed output amid logistics disruptions due to contractors supporting the protests.
Tengizchevroil, the joint venture pumping oil at Tengiz, produces around 700,000 barrels per day (bpd) out of Kazakhstan’s total crude oil production of some 1.6 million bpd.
As Kazakhstan was plunged into protests, with a shoot-to-kill order from President Kassym-Jomart Tokayev, the unrest raised concerns over the energy security of China, which has invested in Kazakhstan’s energy industry.
So China is hosting this week the foreign ministers of the world’s largest oil exporter Saudi Arabia, as well as the foreign ministers of Kuwait, Oman, and Bahrain, and the secretary general of the Gulf Cooperation Council (GCC), Nayef bin Falah Al-Hajraf, The Arab Weekly reports.
The Gulf countries and China will be seeking to progress negotiations over a free trade agreement (FTA) and cooperation in areas including energy.
“The visit is vitally important, and it may lead to positive results for a China-GCC FTA, after negotiations started in 2004,” Li Shaoxian, director of the China Institute for Arab Studies at Ningxia University, told the Global Times.
According to Chinese media and analysts, the Gulf officials and China will also discuss energy ties and regional security.
GCC’s secretary general Al-Hajraf hopes the visit will help strengthen GCC-Chinese relations and economic, investment and technical cooperation, the Saudi Press Agency reported on Monday.
By Tsvetana Paraskova for Oilprice.com
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However, the foreign ministers of Saudi Arabia, Kuwait, Oman and Bahrain as well as the secretary general of the Gulf Cooperation Council (GCC) are primarily in Beijing to accelerate progress on reaching a free trade agreement (FTA) with China and cooperation in areas including energy.
An FTA with GCC would enhance China’s involvement in the Arab Gulf region and fits well with its Belt and Road Initiative (BRI) which is extending its influence over the global economy.
Absent from this gathering in Beijing is the UAE. Of recent time, the UAE has been tilting towards India as part of having thrown its weight behind the US-Israel-UAE-India axis whose aim is to counter the growing influence of the China-Russia-Iran alliance.
Despite having joined the US-led axis and despite its ongoing diversification of its economy, the UAE economy will remain an oil-based economy throughout the 21st century and beyond. This means that the UAE will continue to pivot towards the Asia-Pacific region rather than towards the inevitable declining political influence of the United States. Economics always trumps politics.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London