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China Invests in Uganda's Oil Fields


China’s state-owned oil company, CNOOC, won a $2 billion contract to develop the Kingfisher oil field in Uganda on Wednesday. Due to its rapidly increasing demand for energy, China has been indiscriminately looking for ways to secure its oil needs, with a focus on resource-rich African nations. Reuters reports on the deal:

 Uganda, which struck oil in 2006 and has estimated reserves of 3.5 billion barrels, is aiming for commercial output in 2016. It is one of several nations in the east African region looking to develop newly found hydrocarbons.

The Kingfisher field, with an estimated 635 million barrels of reserves of which 196 million are recoverable, would produce between 30,000 to 40,000 barrels of crude per day, Uganda’s junior energy minister, Peter Lokeris, said.

While that initial $2 billion will be spent drilling wells, it is likely that China will increase its investments in Uganda’s energy infrastructure going forward. Indeed, these commitments have become commonplace for China, who pledged $5 billion towards energy and railroad projects in Kenya last month.

But not all of its trade partners are happy with the way China conducts its business, and it has come under fire in countries like Nigeria and Burma, where government sentiment toward Beijing is now quite similar to the resentment developing nations had for Western powers in the past. China is quickly learning that an expanded footprint in the developing world comes with headaches of its own.

Nevertheless, so long as China remains resource-dependent it will continue expanding its presence in Africa. The more engaged China is in such foreign affairs, the more interest it has in peacefully upholding the capitalist order. For Americans, that’s all good news.

[Oil pipeline photo courtesy of Shutterstock]

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