high level of political, economic, legal and social
uncertainty. A major challenge faced by Chinese
energy companies is how to integrate, optimise
and use their international assets efficiently to
obtain a good return, even when they lack
knowledge and experience. In terms of design
and profitability, Chinese energy companies have
a large gap to bridge compared to their large
international competitors.
Moreover, the energy acquired through direct
economic cooperation is on a small scale. Direct
investment in infrastructure and manufacturing is
massive but insufficient in other economic fields
of cooperation. Due to its lack of trading experience in international energy commodities and
the absence of a fully established energy reserve
system, China is incapable of effectively regulating international oil prices, and is therefore
continuously exposed to fluctuations in international oil prices.
China also suffers from a lack of internationally experienced talent. The ideas, knowledge,
experience and capability that come with international experience are needed to support international business operations and sharpen
competitiveness. China should develop a corps
of internationally experienced talent, equipped
with the requisite global outlook and business
capabilities to enable its energy companies to
implement the Go Out strategy.
The main external challenge is conflicting
approaches to cooperation. Countries differ in
how they resolve conflicts and facilitate dialogue
and cooperation in energy. Binding, authoritative
and relevant international regimes could lower
countries’ transaction costs and facilitate the
formation of international cooperation, according
to new liberal institutionalists. As for energy
security, energy shortage will promote international cooperation on energy governance, rather
than lead to energy conflicts, thereby helping to
eliminate such conflicts. In reality, the approach
of most countries to energy cooperation combines the two ideas above or falls between one or
the other. The landscape of multilateral energy
cooperation is based on different answers to
different problems. However, the perception that
the West is drifting between the two ideas will
hinder China’s participation in energy governance to a large extent.
The second external challenge is the different
conceptions of energy security held by different
countries. Energy experts can be characterised as
arguing that energy security can be ensured by
markets or geostrategy. Markets convert energy
from a strategic commodity into ordinary goods.
Geostrategy views access to energy as a strategic
issue. Experts who hold the former view consider
China’s dependence on imported energy will
help it fit in with the global energy market system. Those who take the latter view, argue that
China’s efforts to reduce its dependence on
energy markets will lead to conflict and threaten
the stability of the international energy market.
One expert pointed out that the USA classifies
China’s energy security strategies as part of a
“strategic” paradigm and defines its own energy
security policies as “market-oriented”. Other
experts indicated that US energy security policies
are based on “hegemonic stability theory”, while
China’s energy security strategies are based on
“peaceful development theory”. These different
conceptions of energy security are the root cause
of distrust and, as a result, poor energy cooperation between nations.
The third external challenge is the conflict of
interest between participants in global energy
governance, which has a negative impact. For
example, long-term China-US structural conflict
makes China doubt the reliability of the International Energy Agency, which is dominated by
the USA. Because of differences between China
and Russia on energy cooperation in Central
Asia, the Shanghai Cooperation Organisation
Energy Club faced a bumpy start. Historical
hostility and issues between China and Japan
impede energy cooperation in North-east Asia.
Several countries politicise energy issues or
dominate other countries’ diplomacy in international dialogues on energy.
The fourth external challenge is the pressure
of international competition. Although progress
has been made in overseas business, Chinese
energy companies are still far behind the oil
majors in terms of capital operations, human
resources, technology and equipment, bidding
666
W. Jigang and P. Webb
uncertainty. A major challenge faced by Chinese
energy companies is how to integrate, optimise
and use their international assets efficiently to
obtain a good return, even when they lack
knowledge and experience. In terms of design
and profitability, Chinese energy companies have
a large gap to bridge compared to their large
international competitors.
Moreover, the energy acquired through direct
economic cooperation is on a small scale. Direct
investment in infrastructure and manufacturing is
massive but insufficient in other economic fields
of cooperation. Due to its lack of trading experience in international energy commodities and
the absence of a fully established energy reserve
system, China is incapable of effectively regulating international oil prices, and is therefore
continuously exposed to fluctuations in international oil prices.
China also suffers from a lack of internationally experienced talent. The ideas, knowledge,
experience and capability that come with international experience are needed to support international business operations and sharpen
competitiveness. China should develop a corps
of internationally experienced talent, equipped
with the requisite global outlook and business
capabilities to enable its energy companies to
implement the Go Out strategy.
The main external challenge is conflicting
approaches to cooperation. Countries differ in
how they resolve conflicts and facilitate dialogue
and cooperation in energy. Binding, authoritative
and relevant international regimes could lower
countries’ transaction costs and facilitate the
formation of international cooperation, according
to new liberal institutionalists. As for energy
security, energy shortage will promote international cooperation on energy governance, rather
than lead to energy conflicts, thereby helping to
eliminate such conflicts. In reality, the approach
of most countries to energy cooperation combines the two ideas above or falls between one or
the other. The landscape of multilateral energy
cooperation is based on different answers to
different problems. However, the perception that
the West is drifting between the two ideas will
hinder China’s participation in energy governance to a large extent.
The second external challenge is the different
conceptions of energy security held by different
countries. Energy experts can be characterised as
arguing that energy security can be ensured by
markets or geostrategy. Markets convert energy
from a strategic commodity into ordinary goods.
Geostrategy views access to energy as a strategic
issue. Experts who hold the former view consider
China’s dependence on imported energy will
help it fit in with the global energy market system. Those who take the latter view, argue that
China’s efforts to reduce its dependence on
energy markets will lead to conflict and threaten
the stability of the international energy market.
One expert pointed out that the USA classifies
China’s energy security strategies as part of a
“strategic” paradigm and defines its own energy
security policies as “market-oriented”. Other
experts indicated that US energy security policies
are based on “hegemonic stability theory”, while
China’s energy security strategies are based on
“peaceful development theory”. These different
conceptions of energy security are the root cause
of distrust and, as a result, poor energy cooperation between nations.
The third external challenge is the conflict of
interest between participants in global energy
governance, which has a negative impact. For
example, long-term China-US structural conflict
makes China doubt the reliability of the International Energy Agency, which is dominated by
the USA. Because of differences between China
and Russia on energy cooperation in Central
Asia, the Shanghai Cooperation Organisation
Energy Club faced a bumpy start. Historical
hostility and issues between China and Japan
impede energy cooperation in North-east Asia.
Several countries politicise energy issues or
dominate other countries’ diplomacy in international dialogues on energy.
The fourth external challenge is the pressure
of international competition. Although progress
has been made in overseas business, Chinese
energy companies are still far behind the oil
majors in terms of capital operations, human
resources, technology and equipment, bidding
666
W. Jigang and P. Webb