China drills while leaving others to kill
- Source: Global Times
- [03:18 November 06 2009]
- Comments
Risky business
Analysts say massive capital investments by BP and CNPC will soon be injected into the oil project in the face of political risk, due to the uncertainty of there being no guarantee that the next government will honor the deal after January elections, not to mention Iraq is still a very violent place.
The contract allows them to start slow – they must spend $300 million over the first 33 months and ramp up production by 10 percent initially.
"CNPC and BP are concerned over the impact on Iraq's oil policy after the government reshuffle. Pouring in capital right now would turn the deal into a reality, which then becomes irreversible," Chen Da'en, vice president of the China University of Petroleum, told the National Business Daily Thursday.
Some analysts have speculated that it's hard for BP and CNPC to make significant profits due to the Iraq's decision in May to place a 35 percent tax on foreign oil companies.
They will be paid $2 per barrel of crude they produce during the 20 year contract, which can be extended by another five years, the AP reported.
In Afghanistan, American and Chinese interests also converge, The New York Times opinion piece said. And by exploiting Afghanistan's metal and mineral reserves, China can provide thousands of Afghans with jobs, thus generating tax revenue to help stabilize a tottering Kabul government, the paper said.
"American troops are providing security for a Chinese State-owned company to exploit the Aynak copper reserves, which are worth tens of billions of dollars," the article said.
In Afghanistan, China Metallurgical Group, together with Jiangxi Copper, have won the right to develop the Aynak copper field, said in 2007 to contain the world's second-largest untapped copper deposits.
In March, China offered to provide Afganistan with $75 million of aid in five years. It has also been helping the war-torn country build roads, bridges and railways in the past few years.
Zhang Han and Liang Chen contributed to this story
