SINGAPORE — Cash-rich China is using a period of relatively low oil prices to improve its energy security and ensure that its economy has the oil-based fuels needed to sustain growth when recovery from the slump takes hold.

Should Japan, which is currently far more reliant on imported oil than China, adopt a similar large-scale strategy? It would mean providing billions of dollars in discounted government loans to Japanese national oil companies bidding for oil in major producing countries.

In its latest annual white paper on energy, the government in Tokyo has called for more investment to help develop oil resources in producing nations, recommending that Japan become a stakeholder to secure a stable supply.

Since February, China has committed over $50 billion to loans-for-oil agreements with four countries: Russia, Kazakhstan, Venezuela and Brazil. They all need large foreign credits to help develop new oil fields. If the deals go through as planned, China will gain access to more than 1.5 million barrels a day of extra oil, over one-third of its current oil imports of 4.1 million barrels a day.

OPEC oil producers have been warning that a recent jump in oil prices, to a six-month high of just over $60 a barrel, is unlikely to be sustained for long. Global oil output is significantly above demand, which has fallen sharply in the recession.

The oil price reached a record level of $147 a barrel last July before falling to under $33 a barrel in February. China, the world’s third-biggest oil importer after the United States and Japan, is taking advantage of the buyers’ market. Its latest loan-for-oil deal, signed in Beijing on May 19, was with Brazil.

Brazil wants to spend nearly $175 billion over the next five years developing oil fields in deep waters off its Atlantic coast that have been discovered in the last two years. The offshore reserves are believed to hold up to 70 billion barrels of oil. Tapping them successfully would catapult Brazil into the ranks of the world’s top oil exporters.

China said it would lend up to $10 billion to Petrobras, Brazil’s government- controlled oil company, in exchange for guaranteed oil supplies. Brazil will provide up to 200,000 barrels of oil per day to Sinopec, one of China’s three main state-owned oil producers, for 10 years.

In April, Venezuela accepted a Chinese offer of $6 billion for financing oil projects while promising to triple oil supplies to 1 million barrels per day to China by 2015.

At about the same time, Kazakhstan announced that it had negotiated a $10 billion oil development loan with Beijing. In return, China received a 50 percent stake in a major Kazakhstan oil-producing company. The pipeline that will carry 400,000 barrels of Kazakh oil to China is due to go into full operation by the end of September.

In February, China finalized a $25 billion loan to two Russian state-owned firms, Rosneft, Russia’s biggest oil producer, and Transneft, the national oil pipeline builder and operator. In exchange, China has been promised 300,000 barrels of East Siberian oil a day, starting by the end of 2010, through a pipeline being built from Russia to China. Workers have just begun building the section from the Russian border to China’s Northeastern oil hub at Daqing.

Meanwhile, China has announced a major expansion of its oil-refining capacity and said it would start building state reserves of refined oil products, such as gasoline, diesel and aviation jet fuel, to protect against supply disruptions. China has also been steadily filling a strategic reserve of crude oil, though on a smaller scale than one held by the U.S.

Imports, mainly from volatile parts of the Middle East and Africa, account for half of China’s oil consumption. The International Energy Agency has forecast that this dependence will rise to nearly 80 percent by 2030.

China’s oil imports from the Middle East and Africa are shipped through Southeast Asian straits. Beijing is worried that shipments could be disrupted in a crisis and wants to diversify its sources of oil supply as much as possible. Hence the new emphasis on Russia, Venezuela, Kazakhstan and Brazil. Beijing’s energy diplomacy aims to empower its three major national oil companies so that each can produce and supply China with oil from abroad. In doing so, Beijing is using government-owned banks with deep pockets and access to mountains of cheap credit to fund the loans-for-oil deals.

This form of partnership, which offers foreign oil producers money for development without ceding direct control of their energy resources to China, is proving attractive at a time when Western banks and companies are constrained by the credit crisis from lending to energy projects in countries considered to be risky.

International oil companies, like Exxon Mobil, Shell and BP, offer technology and expertise that most state-owned national oil companies, including those of China, cannot yet match. But their project bids are not backed by comprehensive government credit, offered on favorable terms.

Thirty years ago, the big international oil firms lorded over 75 percent of global reserves and 80 percent of output. Today, they control about 6 percent of oil reserves and 25 percent of production, while national oil companies in Asia, the Middle East, Africa and Russia have the rest.

China’s oil diplomacy may be bad for Big Oil, yet it is good for the global oil market. It is increasing the oil supply, helping to ensure that when economic recovery comes there will be enough oil to meet demand and keep prices from going through the roof again.

Michael Richardson is a visiting senior research fellow at the Institute of Southeast Asian Studies in Singapore.

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