Cash-rich China is using a period of relatively low oil prices to improve its energy security and ensure that its economy has the oil-based fuels needed to sustain growth when recovery takes hold.
Since February, China has committed more than US$50 billion to loans-for-oil agreements with Russia, Kazakhstan, Venezuela and Brazil. They all need large foreign credits to help develop new oilfields. If the deals go through, China will gain access to more than 1.5 million barrels a day of extra oil. It currently imports 4.1 million barrels a day.
Opec oil producers, who are meeting in Vienna this week, have been warning that a recent jump in oil prices, to a six-month high of just over US$60 a barrel, is unlikely to be sustained for long.
The oil price reached a record level of US$147 a barrel last July before falling to under US$33 a barrel in February. China, the world's third- biggest oil importer, is taking advantage of the buyers' market. Its latest loan-for-oil deal, signed in Beijing last week, was with Brazil.
Brazil wants to spend nearly US$175 billion over the next five years developing recently discovered oilfields off its Atlantic coast. The reserves are believed to hold up to 70 billion barrels of oil. Tapping them would catapult Brazil into the ranks of the world's top oil exporters.
China said it would lend up to US$10 billion to Petrobras, Brazil's government-controlled oil company, in exchange for guaranteed oil supplies. Brazil will provide up to 200,000 barrels of oil per day to Sinopec, one of China's three main state-owned oil producers, for 10 years.
Venezuela last month accepted a Chinese offer of US$6 billion for financing oil projects while promising to triple oil supplies to 1 million barrels per day to China by 2015. Kazakhstan has negotiated a US$10 billion oil development loan with Beijing. In return, China receives a 50 per cent stake in a major Kazakhstan oil producing company. The pipeline that will carry 400,000 barrels of Kazakh oil to China is due to go into full operation by the end of September.