US to urge China to trust in energy markets: Bodman

Washington (Platts)--8Dec2006

The Bush administration wants to encourage China to trust in energy
markets, and not simply buy up energy properties from abroad, US Energy
Secretary Samuel Bodman said Friday.

China in recent years has employed a strategy of obtaining energy
reserves to ensure it has supplies to feed its rapidly growing market. But
"the likelihood of them acquiring anywhere near what they are going to require
as a nation is an improbability," Bodman said.

Instead, Bodman and other Bush administration officials will urge China
to rely on the open market to meet its demand. By doing so, the message will
be, Bejing will have more diverse, more flexible and more reliable supplies.
Relying on market forces -- instead of purchasing reserves -- would also help
US oil companies, who have to compete with state-owned Chinese oil companies
that have access to huge sums of government money.

China also should consider developing its own energy markets, especially
domestic coal and natural gas, instead of relying on foreign supplies, Bodman
told reporters during a briefing on his upcoming Asia trip, which also will
include stops in Japan and South Korea.

The US intends to discuss with China the importance of using emergency
supplies only when there are actual physical shortages in the market, Bodman
told reporters during a briefing. "I'm not worried about anything in
particular," Bodman said. "But you have to assume there will be pressures
brought to bear" on the individuals making decisions about emergency releases
to put the oil on the market during periods of high prices. "We just want to
encourage them to think about the issue," he said.

China is already in the process of building up a 100-million barrel
strategic stockpile of crude oil.

Bodman said the US would urge China to open its doors to US investment
and embrace energy efficiency initiatives. The ultimate goal of the meeting,
he said, was to "develop a cooperative, not competitive, relationship" with
China.

--Cathy Landry, cathy_landry@platts.com

For more news, request a free trial to Platts Oilgram News at
http://www.platts.com/Request%20More%20Information/index.xml?src=story
or subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=1_29&products_id=29