Why Asian NOCs are still reckless in their investment decisions

Author: Iloka Benneth Chiemelie

Published: 8th of September 2014

Taking the case of Chinese NOCs, I think the reason is obvious and easily understandable. The reason for their reckless behavior is because of increased demand and the inability of their NOCs to meet local demands (Keun-Wook, 2007). Another factor is increased global competition for energy supply. (Keun-Wook, 2007).

In the past two decades, China has been the center of huge industrialization and this has skyrocketed its energy demands. This is very difficult for their NOCs to manage especially as the Chinese economy has transformed into a global brotherhood – where demand is high as Chinese products are efficient and affordable. This will increase in years to come as the global population and business increases.

Clifford (2006) presented a summary of the Chinese NOCs’ objectives in the African continent as:

1.      Secure Energy Resources to feed growing demand

2.      Diversify Oil Sources

3.      Diversify Transportation Routes (Naval Capacity)

4.      Increase political equity on continent

Considering the above objectives and discussions, it is obvious that their reckless behavior is due to forced pressure to meet energy demands in their country. Success with that will ensure that they maintain their level of industrialization and further improve on their GDP.

References

Clifford, A. S. (2006). Asian National Oil Companies (NOC) and Africa: Investment Strategies and Implications on U.S. Interests. Available at: http://www.nbr.org/Downloads/pdfs/ETA/ES_Conf07_Shelton.pdf [Accessed on: 8/9/2014].

Keun-Wook, P., Valerie, M., Glada, L., John, V., and Erkin, A. (2007). Trends in Asian NOCs investment abroad. Working background paper. Available at: https://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Energy,%20Environment%20and%20Development/r0307anoc.pdf [Accessed on: 8/9/2014].