The fallacy of ‘China’s foreign oil production’

Nexen oil platform in the Gulf of Mexico Photo Nexen Inc

By Dr Pierre Noël, Sultan Hassanal Bolkiah Senior Fellow for Economic and Energy Security

‘China is on track to produce enough crude oil outside its borders to rival OPEC members such as Kuwait and the United Arab Emirates,’ a report  in the Financial Times suggested last week. The contention was based on the International Energy Agency’s tally of the impact of recent overseas investments by Chinese state-owned oil firms. These have spent $92 billion buying up rivals since 2009, $35bn of that last year. With these acquisitions, the IEA calculates, China will produce 3 million barrels a day of crude oil abroad in 2015, double its 2011 output of 1.5mbd.

True, the growth of Chinese oil and gas companies’ foreign investments is impressive; they are not only bidding for exploration and production licences in more countries and regions, offshore and onshore, they are also devoting large capital expenditures to buying already discovered reserves and even entire groups such as Canada’s Nexen.

However, it makes little sense to aggregate Chinese oil companies’ international production and interpret it as ‘China’s production abroad’ like this.

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Managing risks in cyber warfare

Navy Cyber Defense Operations Command, Watchfloor
By Dr William Choong, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security

It is a nondescript 12-storey building in Shanghai, but its alleged exploits in cyber hacking into American-based computers has put it at the centre of intensified tensions between China and the United States.

The alleged intrusions by China-based hackers are not entirely new. In past years, the Pentagon and Google have alleged that Chinese hackers had broken into their networks. In 2011, it was alleged that Operation Shady RAT had targeted more than 70 organisations over five years. This included the United Nations, government agencies in the US, Canada, South Korea, Taiwan and Vietnam.

But the mounting evidence of China’s support for the hacking and the growing threat posed to US infrastructure, if proven to be true, would represent an emerging Chinese way of war that is truly worrying.

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Can China end the DPRK’s nuclear blackmail?

Then Chinese Defence Minister Liang Guanglie addresses the 2011 Shangri-La Dialogue

By Dr William Choong, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security

Members of the United Nations Security Council, including China, have strongly condemned North Korea’s nuclear test last week, and that rare unanimity could be useful for regional security. If China were to put pressure on North Korea (an historic development that looks possible) while the United Nations Security Council tightened the vice of sanctions, perhaps Pyongyang could be pressured to at least suspend further tests?

This, however, is probably not to be. North Korea has maintained its missile and nuclear programmes as a going concern for years, despite a growing raft of sanctions. In addition, sanctions have done little to change the decision-making of other worrisome countries such as Iran.

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US must overhaul North Korea policy: expert

06 02 13-005 (3)

By Nathan Beauchamp-Mustafaga, Research Assistant for Non-Proliferation and Disarmament Programme

The United States needs to push North Korea straight to the top of its policy agenda, says academic Joel Wit (above), saying that Pyongyang might already possess 25 nuclear weapons and may have deployed a prototype road-mobile intercontinental ballistic missile (ICBM).

Speaking at the IISS several days before Pyongyang carried out its third nuclear test on 12 February, the former State Department official and Visiting Scholar at the US–Korea Institute at Johns Hopkins School of Advanced International Studies (SAIS) said he thought the passive policy of ‘strategic patience’ during the Obama administration’s first four years had failed.

As the administration entered its second term, he suggested, the White House should take a more proactive approach to North Korea – especially given President Barack Obama’s recommitment to Asia and his outspoken advocacy on nuclear issues.

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The battle for Damascus

Douma district of Damascus. Freedom House Photo

Emile Hokayem, IISS senior fellow for Middle East security, has a piece in Foreign Policy on the ‘grand battle for Damascus’ currently gathering in the two-year-old Syrian uprising. Hokayem admits that this isn’t the first time that rebels have attempted to wrest control of the Syrian capital from the regime of President Bashar al-Assad; there were earlier concerted efforts in July and December 2012, which were repelled or contained by the regime’s greater firepower. Nor can further ups and downs in the battle be ruled out. However, Hokayem argues, there is a lot more opposition to the Assad regime within Damascus than is generally understood, and the government will put up incredibly stiff resistance in the life-and-death battle to hold on there.

Hokayem sketches out the political geography of a city where the president can count on a large base of support from bureaucrats, others with ties to the regime, religious minorities and middle- and upper-class Sunni urbanites, but not on Christian and Alawite dissidents from the ‘suburbs’ (or the outlying towns that have been incorporated into the capital). Other areas that have not benefitted from the regime’s largesse or the growth of the previous decade – from the conservative, middle-class neighbourhoods of Barzeh and Midan to the poor Sunni area of Qaaboun – have joined the uprising.

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North Korea’s third nuclear test shows military still first

North Korean leader Kim Jong-un at a  Secretaries Of Cells meeting

By Mark Fitzpatrick, Director, Non-Proliferation and Disarmament Programme

North Korea has again shown with today’s nuclear test that it marches to its own drum – and a decidedly militaristic drumbeat it is. The sole country to have pulled out of the Nuclear Non-Proliferation Treaty (NPT), and indeed, probably the only one to have signed the treaty with the clear intention of violating it, North Korea has been alone in the past 15 years in defying the international norm against nuclear testing.

Defiance might be called the national trait, and North Koreans may be proud to be described that way. In conducting its third nuclear test, Pyongyang not only defied warnings from Seoul, Tokyo and Washington, but also the cautions of its friends in Beijing and Moscow. In recent weeks, selective Chinese state media had been unusually blunt in threatening consequences if North Korea went ahead with its planned test. Now it is likely that China will allow additional Security Council sanctions. It may even apply selective sanctions of its own, as it reportedly did in 2003 in disrupting the flow of oil during the first North Korean nuclear crisis.

The test shows yet again North Korea’s priority for guns over butter, and that its policy of ‘Songun’ (‘military first’) is much more than a mere slogan. In addition to risking a cut-off of Chinese aid and oil, Pyongyang has also made it difficult for South Korean president-elect Park Geun-hye to follow through on her election promise to resume humanitarian aid to the North.

Likewise, the new team that US President Barack Obama is assembling for his second term will be disinclined to pursue any new engagement policies with North Korea. Instead, new sanctions will be applied, especially to try to prevent North Korea from helping nuclear-weapons aspirations elsewhere.

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Khamenei douses hopes for nuclear talks

Ayatollah Ali Khamenei

By Mark Fitzpatrick, Director, Non-Proliferation and Disarmament Programme

He is a mad mullah after all – mad meaning angry, that is. Following the positive notes sounded by US Vice President Joe Biden and Iranian Foreign Minister Ali Akbar Salehi in Munich last week, it did not take long for Iran’s Supreme Leader, Ayatollah Ali Khamenei, to quash any optimism over the next round of nuclear talks between Iran and the international community. These are scheduled to take place in Almaty on 26 February.

In a speech on 7 February, Khamenei ruled out holding bilateral talks with America on his country’s controversial nuclear programme so long as Washington continued pressure tactics. He claimed the US was proposing talks while ‘pointing a gun at Iran’, adding that: ‘Some naive people like the idea of negotiating with America [but] negotiations will not solve the problems.’

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