China seeks direct talks with OPEC


By Jim Krane
Associated Press
Monday, December 4, 2006

DUBAI -- China wants to start direct negotiations with OPEC to secure a stable oil supply and an equitable share of the oil market, a top official said here Monday in comments that underline the Chinese economy's rapidly growing energy needs.

Zhai Jun, China's assistant minister of foreign affairs, told conference participants in Dubai that his country was trying to develop "a negotiating mechanism with OPEC."

"Only through this can we maintain security and stability of our oil imports," Zhai said in a speech to the Arab Strategy Forum here.

Soaring demand for oil in rapidly industrializing China has been blamed as one of the chief causes for oil prices that have spiraled higher over the past two years. China is the world's third largest importer, behind Japan and the United States.

Zhai, speaking in Chinese, appeared to refer to another cause for higher prices -- instability in oil producing countries like Iraq and Nigeria -- when he said China wants to step up efforts to end strife that destabilized the oil marketplace.

"We need to eliminate these hot spot issues," he said.

China is an increasingly big consumer of raw materials and has been seeking a greater voice in pricing of several commodities. The country, which Zhai said imports six percent of the crude traded globally, has been setting up strategic oil reserves and aggressively seeking new suppliers in Africa and South America to help diversify its crude supply. Zhai termed it the "global race for energy."

"China's influence is growing in the Arab world," he said.

He said the Asian giant was opening its energy sector to outside investment and looking to cooperate with foreign partners across its oil sector. Zhai said the country was looking for more formal ties with the Organization of Petroleum Exporting Countries, but didn't elaborate.

"Currently we're making preparations to establish a dialogue mechanism with oil producers," the Chinese diplomat said. "We want to participate as much as possible in some of the big decision processes on the world stage."

During a visit by OPEC president Sheik Ahmad Fahad Al Ahmad Al-Sabah to China last year, the two sides discussed "institutionalizing" a dialogue, acknowledging China's increasing importance as an importer of oil and gas.

China imported 3.1 million barrels a day of crude oil in 2005, and consumed 6.9 million barrels a day, according to U.S. Energy Department data.

The Arab Strategy Forum that lasts through Wednesday brings together business, academic and political leaders from around the world to discuss development and political issues of global interest.

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