US, China take different views of energy security

WASHINGTON, Nov 28 (Reuters) As the world's top two oil guzzlers, the United States and China should have lots in common when it comes to energy policy.

But U S experts see a difference in how the two countries view energy security, one that could undermine economic cooperation as the global titans vie for limited oil supplies in the future.

''Most everybody's in favour of energy security,'' said Daniel Yergin, an energy expert at the Cambridge Energy Research Associates. ''There's just a wide difference on what does energy security mean.'' To U S politicians, including President George W Bush, it means cutting U S import dependence by promoting home-grown fuels like ethanol, and reducing the risk of price shocks by relying on a variety of sources and suppliers.

To Beijing, it means locking up secure supplies in multibillion dollar deals, such as the ones cut in recent years in Venezuela and Canada, U S officials say.

More recently, China has sought closer economic ties with Saudi Arabia, which has shared an oil-for-security relationship with Washington for decades. It has also actively sought long-term supply guarantees with Saudi Arabia and other West Asia producers as it seeks oil to fuel future economic growth.

''A WAYS TO GO'' Karen Harbert, assistant secretary for policy and international affairs at the U S Energy Department, said the United States and China ''still have a ways to go'' in finding common ground.

''It is certainly clear at this point in time that we define energy security differently,'' Harbert told Reuters in an interview.

''We define it as having a supply of reliable, affordable energy, and they define it as having secure access and owning access to that product,'' Harbert said.

U S officials have met frequently with Chinese counterparts to push initiatives in oil technology and efficiency, and emphasise their belief in the importance of allowing the market to set global energy prices.

And China's rising oil use will be centre-stage when U S officials including Energy Secretary Sam Bodman and Treasury Secretary Henry Paulson visit Beijing in December, when they will seek a common energy market vision.

For Harbert, China's soaring demand for energy is not a concern in itself, but its willingness to overpay for crude oil and other resources is.

Because Chinese companies have direct access to government coffers, they can afford to outbid international majors and offer sweeteners like airline deals and arms contracts that private companies can't produce, she said.

''What we are concerned about is ... (China's) very aggressive pursuit of assets around the world, if they are willing to put aside market principles,'' she said.

For William Overholt, director of the RAND Corp.'s Center for Asia Pacific Policy, a prime driver behind China's oil hunt has been its rising dependence on imports.

''The Chinese are new to importing oil and they're terrified,'' Overholt said. ''Their response has been to buy as many oil companies ... around the world as possible.'' The United States is the world's biggest oil user, consuming about 20 million barrels per day (bpd). China uses about 6 million bpd.

But domestic oil demand in China, the world's fourth-largest economy, is expected to rise by 6 per cent this year, double the pace in 2005, compared with slightly negative U S demand growth over the same period.

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