Before 1950s, China was importing all of its oil needs. But good supply of oil from inside the country in places like Songhua Jiang-Liao basin, Shengli, Shandong, Dagang and Heilongjiang over the next 20 years, made its import dependency lesser. In fact in early 1970s, China was exporting oil to Japan. But with rapid economic expansion, China’s net exporter status of oil slowly started withering away by mid-1980s.

So, China started looking out for rich reserves of oil. It also sought to diversify the base of supplies in 1990s as in 1993 internal demand for oil exceeded its domestic production. The Chinese government took it upon itself and encouraged its national companies to expand abroad and lock oil supplies for the second-largest oil-consuming nation.

China had to slowly but smartly acquire/control overseas assets without creating much flutter. Because China’s oil relationship with other countries shifted from that of a net exporter to that of a net importer - oil acquisition became a process of investment in foreign lands and a creation of an internal oil reserve for meeting emergency needs.

While the governments of many Western countries, including the US, usually took a relatively hands-off approach to intervening in oil companies’ investment and purchasing decisions, there was an accord in China that the state must use all available policy tools to secure ownership of foreign upstream production assets by Chinese companies, according to experts and literature focussed on research.

Some like Edward A Cunningham of Massachusetts Institute of Technology have disagreed. In his 2007 note as PhD candidate in the department of political science, he said: “Most analysis of China’s energy governance has placed the central government in the driver’s seat. The reality is that this perspective is grossly misleading."

But what is clear is that China’s strategy of investing in equity stakes to get hold of overseas energy assets began in the early 1990s, around the time the country again became a net importer of oil. It intensified as imports grew, and rose to the top of China’s foreign policy priorities following the September 2001 terrorist attacks in the US that contributed to a perception of a less stable world and greater risks to energy production, according to a confidential report prepared for US-China Economic and Security Review Commission by Eurasia Group in 2006.

It has also led to the use of other foreign policy tools, such as arms sales and foreign aid, to promote the competitive interests of the major Chinese oil companies in the acquisition of production assets, the report stated.

Chinese policy aimed to diversify the country’s suppliers of crude oil, but as is the case for most major importers, their ability to achi-eve such policy goals is so far limited as there is very little data to gauge the success factor.

Chinese government-owned oil companies started investing in production assets outside of China in 1993; around the time the country became a net oil importer. The first acquisition of a production asset outside of Chinese territory was the March 1993 purchase of operating rights for the Banya block in Thailand. Acquisitions of exploration acreage in Canada and Peru followed the same year.

The China National Offshore Oil Company made an investment in its first offshore production assets in Indonesia in 1993. For the first few years, though, the amount of equity oil generated by these projects is said to be relatively insignificant.

In 1998, Chinese reorganisation of its oil and gas industry is said to have freed companies like Sinopec from prior limitations on refining and distribution and so the focus on international asset acquisition was strengthened further.

Chinese firms have also been successful in Iraq, where they outmanoeuvred international oil companies for access to the country’s giant oilfields. Africa also emerged as an important area for China. While China had trysts with North African nations like Algeria and Libya, it was sub-Saharan Africa like Sudan, Congo, Algeria, Gabon and Congo that gave respite.

China, which gets nearly a third of its imported crude oil from Africa, has invested billions of dollars in the past 15 years to pump crude from this war-scarred geography.

Post-2008, the deal flurry continued in grander style. In 2009, Sinopec, China's largest refiner, bought Addax Petroleum, an oil explorer based in Geneva that is active in Nigeria, Gabon and the Kurdistan region of Iraq. The deal was the largest successful foreign acquisition of oil and gas assets by a Chinese company.