Currently, Chinese enterprises mainly face two kinds of third-party intervention risk. The first is direct sanctions by the third party government, especially the United States. If an overseas enterprise trades with countries regarded as "dangerous" by Washington, for example, Iran, Sudan and North Korea, the risk will lead to losses like being excluded from the U.S. market, being incapable of obtaining financing there, and having high-ranking managers of the enterprise barred from the United States. The other risk is indirect sanctions by the third party. Under pressure or cajoling by the third party, the host country has to break its promise. The oil pipeline project between China and Russia once was disrupted by Japan.

As a country whose comprehensive power is rising quickly, China has caused dread among some factions in a conservative country like the United States. Now, its overseas energy exploration raises the risk of third-party intervention. First, gas and oil belong to a strategic industry. As international gas and oil exploration always involves political elements, political influence will be inevitable in China's overseas energy projects.

Second, just like other economic entities that have experienced rapid industrialization, China's energy consumption has risen rapidly together with its economic growth. Since 1993, China has been an oil importer. In the future, China's energy supply will rely more on imports. Therefore, China will be regarded as a competitor by traditional energy-importing countries.

Third, Chinese enterprises' overseas energy exploration will cause disputes with Western energy giants, which used to dominate international gas and oil exploration. Those giants have a strong motivation to persuade their governments and their host countries' governments to limit their Chinese competitors. Political tussles among big countries also will influence China's overseas energy exploration.

Fourth, since it has no advantage when competing with Western energy enterprises in countries that maintain close relations with Western countries, especially America, China has to turn to countries that have less close ties with the United States, such as Iran, Venezuela and Sudan.

Fifth, big Chinese oil enterprises have gone public in the U.S. stock market, which gives some U.S. elements the opportunity to press China through the financial market. The U.S. Government actually required Chinese enterprises to promise not to become involved in oil exploration projects in countries that America specified, mainly Middle Eastern countries, which was the precondition for the Chinese enterprises' listing on the U.S. stock market. After CNOOC's project with Iran was revealed, some U.S. sectors suggested that U.S. companies that hold CNOOC shares should stop investing in the company.

Under these circumstances, China has experienced third-party intervention during its overseas energy exploration. And CNOOC is not the first Chinese oil enterprise to have encountered U.S. intervention when cooperating with Iran. As early as 2004, the Iranian Government invited international public bidding on the exploration of 16 Iranian oil fields. At that time, the U.S Embassy in China actually requested Chinese enterprises to drop their bidding. Therefore, China's overseas oil strategy has to consider international political elements. Russia influences the oil sector in Central Asia; the United States is getting control of oil exploration in Africa; and both countries have a say in the field of energy exploration along the Caspian Sea.

International political conflicts bring both challenges and opportunities to China's overseas oil exploration. For example, as Tehran's relations with Washington become more strained, the former is offering better conditions to foreign oil enterprises, which has greatly decreased foreign investors' financial risks.

It is practical for the United States to realize that China's increasing demand for energy is natural and inevitable, and part of the reason for the increase is attributable to EU and U.S. exporters. Thus, strengthening energy strategy negotiations is more practical than intervention.

In last December, U.S. Treasury Secretary Henry Paulson published an article entitled, "A Broad Dialogue With China," stating that working with China's leaders to help it achieve more environmentally and economically sound growth and constructive engagement with the global energy market is among the topics of its Strategic Economic Dialogue with China. Such a rational attitude is a good start. 

The author is a researcher with the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce