China Invites Oil Co's to Join Invasion of Tibet

The Guardian, UKTuesday, May 30, 2006

By Terry Macalister

The Chinese government is to woo foreign companies such as BP and Shell to explore for oil in Tibet.

The controversial move follows a failure by the partly state-owned PetroChina to realise Beijing's hopes that the disputed land could quickly become a major source of fuel for energy-starved China.

PetroChina is to oversee the opening up of 10 exploration blocks for foreign participation in the Qiantang basin, in the far north of Tibet. The company has asked its Daqing Oilfield subsidiary to prepare a package of data and bidding documents that it will present to foreign oil companies in the second half of this year.

PetroChina was unavailable for comment when contacted by the Guardian but company officials were quoted in the oil industry newspaper Upstream as saying: "The purpose of opening up Qiantang blocks is to protect our exploration rights in Tibet and accelerate the exploration at Qiantang."

Western oil majors are likely to tread warily, however. Tibet is seen by critics as subject to an illegal occupation by the Beijing government, which took control of the land by force in 1949 and which now describes it as an "autonomous" province of greater China.

"I cannot see BP or Shell getting involved, given the politics of Tibet," said Bruce Evers, an oil analyst with Investec Securities, "but some of the smaller independents could be interested."

The Free Tibet Campaign, which demands China's complete withdrawal, said oil companies should refuse any offer to drill in Tibet." No energy company should facilitate a process whereby Tibet's resources are utilised to satisfy China's voracious energy demands whilst Tibet remains illegally occupied and Tibetans are routinely denied participation in key decision-making surrounding any such project," said its spokesman, Matt Whitticase.

"The recent history of western investment in Tibet is littered with companies such as Australian mining company SinoGold and Holiday Inn, which have learned, to their reputational and financial cost, the risk of investing in occupied Tibet and have had to pull out."

Tibet has been seen by Beijing as a major new source of energy.

Qiantang alone is believed to hold up to 10bn tonnes of oil and gas equivalents. PetroChina has drilled its first full exploration well at Qiantang - 5,200 metres above sea level - but discovered the rig it used did not have the capacity to drill deep enough.

PetroChina has also found that the complex geology, huge expense and harsh weather conditions left it struggling to fulfil its promise to the ministry of land and resources to drill 10 wells over a three-year period.