Treasure Of Khan Part 21

"Sandra, I can only tell you where the Saudi oil exports are currently going. The U.S., as you know, has been a prime customer of Saudi oil since the 1930s. Was.h.i.+ngton has long pursued a goal of reducing our reliance on Middle East crude, but Saudi oil still accounts for nearly fifteen percent of our total imported oil."

"How about the European Union?"

"Western Europe obtains most of their oil from the North Sea, but Saudi imports do play a factor. Their proximity to other suppliers should mitigate severe shortages, I believe. No, the hardest-hit countries will be in Asia."

Clayton drained the last of her coffee while she pulled up a file on her computer. She curiously noted that the occupants of the entire room remained seated and listening to her every word.

"j.a.pan will feel a major jolt," she said, scanning the report. "The j.a.panese import one hundred percent of their oil requirements and were already stung by the recent earthquake in Siberia that took out a section of the Taishet-Nakhodka pipeline. Though not widely publicized, that accident had already pushed the price of oil up three to four dollars a barrel," she noted. "I can tell you that j.a.pan imports twenty-two percent of its oil from Saudi Arabia, so they will feel a significant contraction. However, a temporary boost in Russian oil exports could take away something of the strain once the Siberian pipeline is repaired."

"And China?" an anonymous voice asked. "What about that fire near Shanghai?"

Scanning down the page, Clayton furrowed her brow.

"The Chinese will be facing a similar shock. Nearly twenty percent of China's oil imports come from Saudi Arabia," she said, "all of which arrives by tanker s.h.i.+p. I haven't a.s.sessed the impact of the fire at the Ningpo oil terminal, but I can only speculate that combined with the Ras Tanura disaster, the Chinese will be facing a major hurdle in the near term."

"Are alternative sources available to the Chinese?" a voice in the back asked.

"Not readily. Russia would be the obvious source, but they are more inclined to sell their oil to the West and j.a.pan. Kazakhstan might provide some relief, but their pipeline to China is already at capacity. I think there could be a dramatic impact to the Chinese economy, which is already suffering a shortage of energy resources." Clayton made a mental note to review the Chinese situation in more depth when she returned to her office.

"You mentioned domestic fuel shortages earlier," a pasty-faced man in a purple tie asked. "How severe will that be?"

"I would expect only temporary shortages in limited areas, a.s.suming no other market impacts. Again, the main problem we are facing is fear. Fear of another supply disruption, either real or imagined, is the real culprit that could drive us to a complete meltdown."

The meeting wound down as the crowd of financiers glumly scurried back to their gray work cubicles. Clayton gathered her laptop and headed for the door as a figure drew up alongside her. Turning her head, she gazed with apprehension at the slovenly figure of Eli, a doughnut crumb on his tie.

"Great meeting, Jan." Eli grinned. "Can I buy you a cup of coffee?"

Gritting her teeth, all she could do was smile and nod.

-13-

IT WAS A STIFLING day in Beijing. A suffocating conflux of heat, smog, and humidity doused the congested city in a thick soup of misery. Tempers flared on the streets as cars and bicycles jostled for position in the jammed boulevards. Mothers grabbed their children and flocked to the city's numerous lakes in an attempt to seek a reprieve from the heat. Teenage street vendors hawking chilled Coca-Colas made stellar profits quenching the thirst of sweaty tourists and businessmen.

The temperature was little cooler in the large meeting room of the Chinese Communist Party headquarters, situated in a secure compound just west of Beijing's historic Forbidden City. Buried in the bas.e.m.e.nt of an ancient edifice inaptly named the Palace Steeped in Compa.s.sion, the windowless conference room was an odd conglomeration of fine carpets and antique tapestries mixed with cheap 1960s office furniture. A half dozen humorless men, comprising the elite Standing Committee of the Political Bureau, the most influential body in China's government, sat at a scarred round table with the general secretary and president of China, Qian Fei.

The stuffy room felt much hotter to the minister of commerce, a balding man with beady eyes named s.h.i.+nzhe, who stood before the party chiefs with a young female a.s.sistant at his side.

"s.h.i.+nzhe, the State just approved the five-year plan for economic progress last November," President Fei lectured in a belittling tone. "You mean to tell me that a few 'accidents' have rendered our national objectives unfeasible?"

s.h.i.+nzhe cleared his throat while wiping a damp palm on his pant leg.

"Mr. General Secretary, politburo members," he replied, nodding to the other a.s.sembled bureaucrats. "The energy needs of China have changed tremendously in the last few years. Our rapid and dynamic economic growth has driven a high thirst for energy resources. Just a few short years ago, our country was a net exporter of crude oil. Today, more than half of our consumption is supplied by crude oil imports. It is a regrettable fact due to the size of our economy. Whether we like it or not, we are captive to the economic and political forces surrounding the foreign petroleum market, just as the Americans have been for the last four decades."

"Yes, we are well aware of our growing energy appet.i.te," stated Fei. The recently elected party head was a youthful fifty-year-old who catered to the traditionalists in the bureaucratic system with equal parts charm and wile. He had a reputation for being hot-tempered, s.h.i.+nzhe knew, but respected the truth.

"How severe is the shock?" another party member asked.

"It is like having two of our limbs cut off. The earthquake in Saudi Arabia will drastically restrict their ability to s.h.i.+p us oil for months to come, though we can develop alternate suppliers over time. The fire at Ningbo Harbor is perhaps more damaging. Nearly a third of our imported oil flows through the port facility there. The infrastructure necessary to receive oil imports by s.h.i.+p is not something that can be quickly replaced. I am afraid to report that we are facing immediate and drastic shortages that cannot be easily remedied."

"I have been told the damage repairs may take as long as a year before the current level of imports can be restored," a white-haired politburo member said.

"I cannot dispute the estimate," s.h.i.+nzhe said, bowing his head.

Overhead, the room's fluorescent lights suddenly flashed off, while the noisy and mostly ineffective air-conditioning system fell silent. A stillness settled over the darkened room before the lights flickered back on and the cooling system slowly clanged back to life. Along with it came the temper of the president.

"These blackouts must stop!" he cursed. "Half of Shanghai was without power for five days. Our factories are operating limited hours to conserve electricity, while the workers have no power to cook their dinner at night. And now you tell us that we will be short of fuel oil from abroad and our five-year plan is rubbish? I demand to know what is being done to solve these problems," he hissed.

s.h.i.+nzhe visibly shrunk before the tirade. Glancing around the table, he saw that none of the other committee members were brave enough to reply, so he took a deep breath and began speaking in a quiet tone.

"As you know, additional generators will go on line shortly at the Three Gorges Dam hydroelectric development, while a half dozen new coal- and gas-fired power plants are in various stages of construction. But obtaining sufficient natural gas and fuel oil supplies to operate the non-hydro power plants has been a problem, and is more so now. Our state-sponsored oil companies have stepped up exploration in the South China Sea, despite protests from the Vietnamese government. Furthermore, we continue to broaden supply relations.h.i.+ps abroad. The foreign ministry has recently completed successful negotiations to purchase significant quant.i.ties of fuel oil from Iran, I might remind the committee. And we are continuing efforts to acquire Western oil companies that own rich stocks of reserves."

"Minister s.h.i.+nzhe is correct." The gray-haired foreign minister, who sat quietly to the side, coughed. "These activities address long-term sources of energy, however, and will do nothing to solve the immediate problem."

"Again, I ask, what is being done to address the shortfall?" Fei nearly shrieked, his voice rising an octave.

"In addition to Iran, we have spoken with several Middle Eastern countries about boosting their exports. We must of course compete with the Western countries on price," s.h.i.+nzhe said softly. "But the Ningbo Harbor damage physically limits the amount of oil we are able to bring in by sea."

"What about the Russians?"

"They are in love with the j.a.panese," the foreign minister spat. "Our attempt to jointly develop a pipeline from the western Siberian oil fields was rejected by the Russians in favor of a line to the Pacific that will supply j.a.pan. We can only boost rail s.h.i.+pments of oil from Russia in the short term, which, of course, is not a feasible means to transport any sizeable quant.i.ties."

"So there is no real solution," Fei grumbled, his anger still simmering. "Our economic growth will terminate, our gains against the West will cease, and we can all just return to our cooperative farms in the provinces, where we will enjoy continuing blackouts."

The room fell silent again as no one dared even breathe in the face of the general secretary's ire. Only the tinny rattle of the air-conditioning rumbling in the background stirred the heavy morose in the air. Then s.h.i.+nzhe's a.s.sistant, a pet.i.te woman named Yee, cleared her throat.

"Excuse me, General Secretary, Minister s.h.i.+nzhe," she said, nodding to the two men. "The State has just today received a peculiar offer of energy a.s.sistance through our ministry. I am sorry I didn't have the opportunity to brief you, Minister," she said to s.h.i.+nzhe. "I didn't recognize the importance at the time."

"What is the proposal?" Fei asked.

"It is an offer from an ent.i.ty in Mongolia to supply high-quality crude oil..."

"Mongolia?" Fei interrupted. "There's no oil in Mongolia."

"The offer is to supply one million barrels a day," Yee continued. "Delivery commencing within ninety days."

"That's preposterous," s.h.i.+nzhe exclaimed, glaring at Yee with irritation for publicly sharing the communique.

"Perhaps," Fei replied, a look of intrigue suddenly warming his face. "It is worth investigating. What else does the proposal say?"

"Just the terms they demand in return," Yee replied, suddenly looking nervous. Pausing in hopes the discussion would end there, she sheepishly continued when she saw all eyes were fixed on her. "The price of the oil shall be set at the current market price and locked for a period of three years. In addition, exclusive use of the northeast oil pipeline terminating at the port of Qinhuangdao shall be granted, and, further, the Chinese-controlled lands denoted Inner Mongolia shall be formally ceded back to the ruling government of Mongolia."

The staid audience erupted in an uproar. Cries of outrage rocked through the room at the shocking demand. After minutes of boisterous dissent, Fei pounded an ashtray on the table to regain silence.

"Silence!" the president shouted, immediately quieting the crowd. A pained look crossed his face, then he spoke calmly and quietly. "Find out if the offer is real, if the oil does, in fact, exist. Then we shall worry about negotiating an appropriate price."