China, Niger: Beijing's Risky Oil Deal

Jun 4, 2008 | 18:31 GMT

Scott Peterson/Liaison


State-owned oil company China National Petroleum Corp. (CNPC ) announced a $5 billion deal to develop oil reserves in Niger on June 3. The deal calls for CNPC to develop Niger's Agadem oil block and likely includes extending CNPC's interests it holds in two other blocks in Niger. While Niger is an improbable place for a large oil project — given militant risks to the project and since the country has never been an oil producer — China's need to secure oil supplies combined with the price of oil above $120 per barrel gives it the flexibility and incentive to take the risk in Niger.

Despite its risks, China's high oil prices plus its thirst for the commodity make an oil deal in Niger worth chancing for Beijing....

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