Associated Press

New Orleans, July 1:

Delegates to an annual US-China energy summit this week cast their relationship in optimistic terms, even as they pointedly staked claims on future supply. The official programme was dominated by dry technical presentations, but talk during the coffee breaks quickly turned to latest twists in the burgeoning battle between Chevron Corp and CNOOC Ltd’s for control over Unocal Corp. The corporate struggle for some has morphed into a battle of economic nationalism, and escalating anti-China rhetoric on Capitol Hill cast a pall over this year’s event.

“Everyone is trying to be very careful and as diplomatic as possible,” said Michelle Foss, head of the Center for Energy Economic at the University of Texas, who has participated in recent years. “In previous years, there wasn’t that much of a head-to-head competition, and this year there is.”

The forum alternates between the US and China. This year’s event came as oil prices rose to $60 a barrel, the latest stage of a long climb that has frustrated US motorists and left China with a $30 billion (euro25 billion) trade deficit that one senior Chinese delegate called

“unbearable.” US energy diplomacy toward China has never been as clear cut as with other countries. As a fellow oil importer, China differs from countries like Russia and Saudi Arabia, where the US agenda of promoting US participation is straightforward. Diplomatic-minded representatives from both the US and China see areas of mutual interest, such as technology to boost output and greater dialogue in coordinating the response to rising demand. US officials are also prodding China to make its energy pricing and consumption data more reliable and transparent.

Given the rising rhetoric, energy diplomacy between the two countries faces “stiff headwinds,”

said Jason Kindopp, a China analyst at risk consultant the Eurasia Group. “The tenor of rhetoric in both Beijing and Washington is getting pretty heated,” Kindopp said. “It’s

going to get more and more difficult to have any serious efforts to coordinate.” Delegates to the two-day event emphasized points of mutuality in their speeches. Chevron executive John Gass invoked a Chinese phrase meaning “harmonious development,” the mutual effort “to provide the energy that drives economic growth and provides better life for humankind.” With or without Unocal, Chevron hopes to supply natural gas to China from its giant Gorgon project in Australia. At the same time, Gass, the only speaker to refer to the Unocal saga in his official remarks, vowed that Chevron would “compete vigorously” on the Unocal transaction

with CNOOC, which he called both a “partner” and an “honorable competitor.” By all accounts,

Chevron has been pressing its case aggressively. The US company has questioned the Chinese government’s financial support of CNOOC and enlisted congressional critics of China who have sometimes cast the corporate battle in harsh terms. Zhang Guobao, who similarly spoke of a “harmonious society,” also delivered a pointed message to his US audience regarding US opposition to China’s energy deals with Iran, Sudan and other countries under US sanction.