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China On the Oil Hunt

WASHINGTON, D.C. -- China's global quest for crude oil will remain acceptable as long as the nation develops the deposits and doesn't hoard them, a senior State Department official said Tuesday, according to Reuters.

The world's second-largest oil user behind the United States, China has recently scoured the globe for oil deals in Canada, Latin America and Africa. China consumes more than 7 million barrels per day of crude oil versus the U.S. 20 million, but the growing demand is a large reason for pushing crude oil over $55 a barrel.

"China's energy needs are going to be enormous in the future," said Christopher Hill, the State Department's assistant secretary for East Asia and the Pacific.

"The question is, are they looking to develop energy or are they looking to take it off the market," Hill told a Senate Foreign Relations subcommittee hearing on China's growing economic might.

State-run Chinese companies have spent billions of dollars on oil assets overseas to boost supplies for a country that imports 40 percent of its energy needs.

"The biggest impact on U.S. national interests is China's willingness to invest in and trade with problem states" such as Iran, Sudan and Burma, Hill said in a written testimony. "We are concerned that China's need for energy and other resources could make China an obstacle to U.S. and international efforts to enforce norms of acceptable behavior.”

Alaskan Sen. Lisa Murkowski, chair of the East Asian and Pacific Affairs subcommittee, said the United States faces growing competition from China in Canada, which is the biggest U.S. oil exporter.

Canadian and Chinese firms are cooperating to build a $2 billion pipeline to ship crude from Alberta to the West Coast to be sent to China via tanker.

"China has brought the competition for natural resources to our backyard," Murkowski said.

The Energy Information Administration forecast that China's oil demand would grow by 600,000 barrels per day in 2005 from last year. For all of 2005, China will consume an estimated 7.2 million barrels per day, with demand rising to 7.8 million bpd in 2006, the EIA said.

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