Hungry for Power; Chinese officials are scouring the globe for the energy they need to keep the economy humming.

Byline: Melinda Liu, With Melissa Roberts in Sydney, Peter Janssen in Jakarta, Frank Brown in Moscow and Kim Gurney in Cape Town

Indonesia has long been a playground for the West's oil giants. The names are familiar enough: Unocal, Caltex, BP, ExxonMobil, to name a few. For decades these Western majors have staked out turf in the Southeast Asian archipelago, hauling in billions in black gold. But the times--and the players--are starting to change: the Chinese are coming. Earlier this year some pin-striped American oil executives in Washington, D.C., were startled to hear Indonesia's visiting Minister of Energy Purnomo Yusgiantoro chide them about losing out to Chinese companies in his country's oil and gas scene. "If American businessmen don't become more active, their Indonesian presence will become less and less," he warned. "Maybe you should learn from the Chinese. [They] are very aggressive."

China can't afford to be anything else. Only 10 years ago Beijing was a net oil exporter and its commissars were just emerging from the shadows of socialist energy policies. But this year China overtook Japan to become the world's second largest oil importer--trailing only the United States--and it's looking everywhere for the energy resources it needs to feed its feverish economic pace. Indeed, the country's blistering growth--topping 9.1 percent in 2003--is making China's energy needs only more acute. Last summer rolling blackouts shut down factories in 21 provinces. More and more Chinese are purchasing their first automobiles: in 2003 mainland Chinese bought nearly 2 million cars, and experts expect 100 million gas guzzlers on China's roads by 2014. And after seeing a number of deals slip through its fingers, Beijing has quickly learned that the international hunt for oil and gas is a competitive, unpredictable and sometimes cutthroat business. "There's a great competition among big countries grasping for overseas oil supplies," says Wang Yupu, the general manager of Daqing, China's biggest oilfield. "We're all competing with each other."

Beijing's most recent lesson in the international contest for oil was dealt by its neighbor to the north. Last May President Hu Jintao traveled to Moscow to put his seal of approval on a 25-year, $150 billion agreement between the state-owned China National Petroleum Corp. (CNPC) and Yukos, Russia's largest oil company, for the construction of a 2,400-kilometer pipeline. Beijing seemed virtually assured of the deal, which would move some half-million barrels a day from the Siberian oil terminus of Angarsk to Daqing. The deal suggested that the two great powers were finally setting aside decades of bitter competition in favor of a union that would join Asia's biggest oil exporter with Asia's biggest oil importer.

That is, until Japan swept in as the spoiler. Tokyo, which must import nearly all its oil, raised the ante by offering to put up $5 billion for the pipeline's construction and several billion more for oilfield development and exploration. The Japanese proposal envisioned a pipeline carrying Russian oil to the Pacific port of Nakhodka--and notably bypassed Chinese oilfields. But Russian officials no doubt saw its strategic advantage too: a pipeline stretching out to the coastline holds the prospect of Moscow's selling its crude to multiple buyers, including Japan, South Korea, China and the United States. If that didn't kill the Chinese deal, then the arrest of the deal's chief Russian sponsor, Yukos CEO Mikhail Khodorkovsky, on charges of tax evasion probably did. "With Khodorkovsky in prison," says Vasily Mikheev of the Far Eastern Institute at the Russian Academy of Sciences, "the Chinese lobbying resources disappeared."

Given the natural rivalries that beset the race for energy resources, China is now following the tried-and-true path of most Western countries: cozying up to the Gulf states. Fourteen years ago Beijing didn't even have diplomatic relations with Saudi Arabia, the world's largest oil exporter. Now Chinese diplomats are spending more time in Riyadh, Saudi oil officials are learning Mandarin Chinese and the bonds between the two countries are stronger than ever. Little wonder that Chinese officials afforded VIP treatment to Saudi Oil Minister Ali al-Naimi when he visited in early April. And it may have paid off: the minister boosted hopes for a long-delayed $3 billion contract to ...