We’ve all become fairly acquainted with the “All of the Above” energy strategy prominently touted by the U.S. government.
While people from both sides of the political spectrum will argue ad infinitum over the details, the goal here is simple and straightforward: to develop every source of American-made energy.
But if you want to see a real energy plan in action, look no further than the Middle Kingdom…
A Real “All of the Above” Strategy
Ever wonder what a true “All of the Above” energy policy looks like?
Believe me, it doesn’t involve a war on coal, hyping some new alternative energy that’s decades away from being economically viable, or tossing a Hail Mary pass into the massive kerogen resource out west in the Green River Formation.
You see, there’s one serious difference between our policy of embracing all forms of U.S. energy and China’s own plan to secure future energy supplies: China isn’t stopping at its borders.
Although this strategy seems obvious, it’s much more subtle than you might think.
Take the $15.1 billion deal for CNOOC to acquire Nexen that first grabbed your attention, or perhaps the $2.2 billion CNOOC spent for a stake in Devon Energy’s shale fields… These two examples are drops in the bucket when it comes to China’s energy ambitions.
And the oil and gas-rich deposits in North America aren’t the only resources China is after…
You might remember a little $36 billion transaction struck earlier this year between the Chinese and Venezuela.
In exchange for a much needed loan, the Chinese were willing to accept future crude oil shipments as payment — skimming well over 500,000 barrels per day off the top of Venezuela’s production.
This wasn’t the first time this sort of bargain was made. A similar trade was made with Brazil back in 2009, leaving Petrobras on the hook to ship about 200,000 barrels per day to Chinese ports for an entire decade.
And one of the latest deals of this kind came just a few days ago, when China shelled out $5 billion for an 8.33% stake in an offshore oil field in Kazakhstan.
Now, I could give you three guesses as to why the Chinese are inking long-term energy deals on a daily basis, but I’m confident you’ll only need one.
I can guarantee the Keystone XL Pipeline wouldn’t be up for debate in Beijing.
No, when it comes to energy, the Chinese have a clear goal in sight.
A Race for the Prize
Regardless of what you think about China’s race to secure future energy supplies, there’s no question that it will reach new heights over the next ten years.
When I recently broached the topic with my colleague Christian DeHaemer, he had a different take on the situation. And while we usually butt heads when it comes to the specific investment angle in most scenarios, this time was a little different.
And that’s because there’s nothing to argue over.
“This energy race is just a means to an end,” Chris told me, pausing for a moment before adding, “The real prize is something much bigger than most people can grasp.”
Now, I know he’s been known to have a bullish outlook regarding the Middle Kingdom.
And considering the kind of economic growth expected in the foreseeable future, I don’t blame him.
You see, while the endgame for the U.S. is energy independence (mostly from our nasty addiction to OPEC oil), China has a bigger target in mind — a much bigger, global target.
“You’re not concerned about a takeover?” I asked him.
“Concerned? Hell, my readers and I are banking on it happening!” he bellowed.
“It’s a win-win situation for us that’s been developing for years — and will last for decades.”
He went on to explain how he and his readers are taking full advantage of this waking dragon…
These are precisely the kind of profits he’s tapped into time and again — and I know for a fact his readers won’t be sitting on the sidelines when this explosive opportunity in energy investing comes into play.
I learned this morning that Chris is on the verge of releasing his groundbreaking research. So I suggest keeping an eye out for his investment report next Tuesday.
Until next time,
Keith Kohl
@KeithKohl1 on Twitter
