“You scratch my back and I’ll scratch yours” is a common idiom and one I’m sure we all know the meaning of. It also holds a sentiment that we see enacted across our sector on a regular basis.
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China and the Middle East are currently in a relationship where the scales of mutual need are perfectly balanced. China relies on foreign trade to fill significant amounts of its energy demand and the Middle East is key when it comes to oil imports, as it accounts for 43% of China’s supplies and Saudi Arabia alone supplies 15% of China’s total annual imports, according to Brookings Doha Centre. Natural gas importing is now expanding in China as well, and whilst the majority of the country’s imports come from Central Asia, in 2013 Qatar became the second largest supplier of LNG to China. This is only expected to rise as the Chinese government seeks to increase the volume of gas in the nation’s energy mix. However, it’s not just China that relies on the Middle East. As China realises that it needs a great portion of outside help to help satisfy its energy consumption, it is opening its chequebook and investing overseas. Iraq has been a big recipient of Chinese financial support since 2007 and Brookings reported that, “in 2013, the biggest addition to China’s Middle East imports of oil was due to its direct investment in Iraqi oil wells.” China is also investing a great deal in infrastructure in the Middle East in the form of pipelines and transport infrastructure in the guise of the 'New Silk Road.' The relationship is mutually beneficial between the two regions as China gets a secure supply of oil and gas, and the Middle East gets a steady supply of investment. However, it has been suggested that China’s investment could be in place to ensure that the Middle East is a constant trading partner, even when geopolitical problems arise, and that as time goes on the association could expand to commodity trading and business development.
The above is an example of a prominent and truly cemented mutually beneficial relationship between two markets in the energy sector. Mexico is an example of a country only just embarking on discovering and developing these binding and reciprocal associations. Following approximately 80 years of a Pemex monopoly in the oil and gas sector, the country is now open to private investment from overseas. Not only could this be a turning point for the country and its declining oil industry, but it could also be a new haven of wealth for foreign investors. In March this year when the Mexican President Enrique Pena Nieto visited Aberdeen, then Energy Minister Matthew Hancock emphasised an “era of closer collaboration in energy” between the countries and said that “together with Mexico’s energy ambitions and the UK’s wealth of experience and expertise, now more than ever there are unparalleled opportunities for partnership across business and education.” So, the channels of communication are already open for a partnership of common interest in this instance.
The oil and gas sector, and energy sector as a whole, is truly global, and despite geopolitical problems that do arise, the industry is not mutually exclusive by country. This can be clearly seen above and will no doubt be further demonstrated for years to come.