CHINA: THEY’LL BUILD THIS CITY ON OIL’N’ MONEY

It is easier to imagine the kind of desperate scenarios described by Peak Oilers in an economy like China's than in western nations. It is easy to see this project, for instance, turning into a ghost town when the oil starts drying up.

Mideastern Investor Announces $5 Billion Plan for Beijing Oil Center
Joe Mcdonald, July 17, 2007 (AP via Yahoo Finance)

WHO
Esam Yousif Janahi, CEO, Gulf Finance House;
Esam Yousif Janahi, CEO, Gulf Finance House

WHAT
Gulf Finance House will, with China’s approval, build the International Energy City, a $5 billion oil industry business center.

WHEN
Project announcement/letter of intent signed July 17. Completion aim: 5 years.

WHERE
- The business center will be in the eastern Beijing suburb of Sanhe. Gulf Finance House is based in Bahrain. Gulf Finance House has similar projects in Qatar and near Mumbai, India.
- Six Arab Gulf countries investments in China will grow: Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Oman and Bahrain

WHY
- The project reflects growing China-Middle East oil ties.
- China: No. 2 world oil consumer, demand up 7%/year, imports up 11.2% in 1st 6 mos of 2007
- Chinese oil industry: 3 state-owned giants = 75% of production. Foreign players restricted to 51% of joint ventures or lessinvestors. Multinational Oil Cos do not have much presence.
The blue line keeps getting higher and higher above the pink one. (click to enlarge)

- Planned features of International Energy City: a business park, a Chinese-Arab business school, laboratories, executive housing
- No tenants committed, talks ongoing, financing expected from several hundred Arabian Gulf investors

QUOTES
- Janahi: "We are here to share the prosperity of this great country…"
- Jim Brock, Beijing oil industry consultant: "You don't really need a lot of space…"