Travelling East: The Great Continental Energy Shift

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Executive Summary

We are in the midst of a migration of the energy consumption center from the Western economies to the East and particularly China. Why is this paradigm shift? Because the Chinese oil companies, representing the fastest growing and potentially the largest consuming market, will and may already possess the market power historically enjoyed by the International Oil Companies (IOCs). The implications of this shift to Australia are numerous and positive albeit challenging. We can address those implications and challenges in terms of political stability, energy resource availability, geographical proximity and labor force adequacy. Let's discuss the migration of the energy consumption center is from West to East. Observation asserts that controlling the demand side might in fact be as powerful as controlling the supply side. Furthermore, the Chinese oil & gas companies, representing Chinese demand, are emerging as the dominant players in the world energy theater. China's rapidly rising demand for energy is causing some anxiety among other energy consuming nations who view its global pursuit of oil assets and energy sources as an out-dated example of mercantilism. Using the recent examples of Chinese investments and agreements in Africa, South America and Russia, a recent Financial Times editorial stated that this behavior have led some observers to describe this as the "Great Chinese Takeaway."This is because Chinese oil & gas companies, although scouring the world for energy resources, do so across a very wide geographical spectrum and indeed in some areas previously deemed too dangerous, expensive, "Hard to get" or control.

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