Energy and geopolitics China style

by / Tuesday, 06 May 2014 / Published in Smartgrid-CI Blog

In the last two days China has announced two major energy moves with new key partners.

How to provide energy for one fifth of the world’s population when you own only 6% of the planet’s dry land? This is the kind of dilemma China faces all the time when it comes to resources. In the past few years, China has developed a strategy in agriculture for acquiring resources it does not have at home. In a recent past, China has bought farm land in Africa   and in other places such as Ukraine.

China is not the only one to do so but the most populated country on earth seems to have given a new spin to its worldwide acquisition of resources. In the past two days only, it announced two massive energy related investments. One is taking place in Turkey where Chine will invest $12B in a coal mining power plant combined project in the Afşin-Elbistan region that holds around 40 percent of Turkey’s lignite.

China committed to this operation with a remarkable sense of opportunity. The project was originally supposed to be developed with the Abu Dhabi National Energy Company (TAQA) that withdrew in August 2013, eight months after the agreement was signed. It took China a few months only to take over and commit to this major investment.

Two days ago, China announced its intention to fund $20 billion in Iran’s water, electricity sector.

So far five power plant projects, eight hydroelectric dams plant, and eight projects on water transmission and drainage have been defined. Interestingly enough, this agreement is signed at a time when $22B worth of Iranian assets is frozen in China.

In both cases, China is helping key countries develop their energy but let’s make no mistake, the giants’ actual goals is energy security. The deal will give China access to Turkey’s coal and will contribute to securing and maybe increase China’s oil supply from Iran in helping this country diversify its energy generation. What is more spectacular is China’s ability to invest massive amounts of money on this kind of deal. For the Chinese takes energy strategy is very serious matter.

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