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Friday, August 11, 2006

China wants more supertankers

Reported here:
China needs to drastically expand its supertanker fleet to safeguard the security of its oil supplies, sources said Friday.

China is now the world's second largest crude oil importer. Imported crude accounts for 43 percent of its consumption. But over 90 percent of its imports are currently transported by foreign oil tankers, the Shanghai Securities News reported Friday.

The setup is both economically and strategically unsound, it said.

China has begun to build a strategic oil reserve system, but a strategic transport system is equally important, the newspaper said.

Li Lianzhong, an official with the central policy research institution, said, "To safeguard the security of national oil supplies, at least 50 percent of crude imports must be transported by our own supertankers."

Citing Japan as an example, he said Japanese ship owners have more than 20 million tons of supertanker capacity, equal to 80 percent of their annual oil imports.
The plan calls for a 75-million-ton capacity Chinese supertanker fleet by 2010, which will be expanded to 130 million tons by 2020.

China is the world's third largest shipbuilding country and faces no particular technical difficulties in building supertankers, or Very Large Crude Carriers (VLCCs).
But over 90 percent of its imports are currently transported by foreign oil tankers... Hmmm. That does seem like a strategic vulnerability. I'm very interested in the timeline they are projecting and what they see on the horizon that might cause them a problem...

When could their friends in Iran get a nuke?

UPDATE: MilBlogs comment from Eric Blair:
I'm not seeing a good connection between Iran having nukes and Chinese having nationally flagged supertankers.

I don't think it really change the issue, as most supertankers are flagged by countries 'not involved' so to speak.

Maybe the Chinese just want a better shipping rate, since they'll be charging themselves and not some shipping company out of Sinapore or Japan or someplace like that.
Comment response:
Good comment.

My thought was that many of the "flags" of the current ships being used by China could be susceptible to being forced out potential war zones (say the Persian Gulf) due to high insurance rates and threat of loss. Having your own hulls frees you to sail where regular commercial vessels might not dare to go.

China has significant oil trade with Iran.

In the event of a West v. Iran war over the Iranian nukes (use or possession thereof) and assuming these Chinese tankers are then available and also assuming an agreement between China and Iran, Chinese flagged ships might not draw Iranian fire while posing an interesting diplomatic and military challenge to the West... Non-Chinese flagged ships could be threatened by Iran in the Strait of Hormuz or the Persian Gulf with some economic impact on the West.

How long before Iran might have a nuke plays a role in determining when China might want to have the flexibility offered by having its own hulls available.

Another factor might include that many of the oil tankers now being used by China are owned or controlled by U.S. companies or by allies and may be requested/directed not to sail for China should the need arise to, in essence, "embargo" or threaten to embargo China's oil supply... say over some issue with Taiwan...

If the Chinese fully own and control their own tanker fleet then they eliminate this embargo threat. It also allows for escorting by the PLAN if need be. Lessening the embargo threat would help free her to act (with Taiwan say) with lessened concern of an economic shutdown imposed by outside forces.

It may still be an excess of caffeine at work.

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