Oil Espionage: Feel The Wrath Of China!

 

An American geologist– Xue Feng–was sentenced to eight years in prison for gathering data on China's oil industry, as reported by the Associated Press today:

"[The] verdict said Xue received documents on geological conditions of onshore oil wells and a database that gave the coordinates of more than 30,000 oil and gas wells belonging to China National Petroleum Corporation and listed subsidiary PetroChina Ltd. That information….was sold to IHS Energy, the U.S. consultancy Xue worked for and now known as IHS Inc."

While it is still unclear whether Xue actually committed the alleged act, oil industry espionage is hardly anything new.

Highlighting "cyberspies" are increasingly targeting strategically important businesses, The Christian Science Monitor did an in-depth report in January that at least three U.S. major oil companies - Exxon Mobil (XOM: 57.22 +0.65 +1.15%), ConocoPhillips (COP: 49.91 +1.09 +2.23%), and Marathon Oil (MRO: 31.4901 +0.6601 +2.14%) -  were the target of a series of cyber attacks.

The "hacking" was aimed at the valuable "bid data" detailing the quantity, value, and location of oil discoveries worldwide. Oil companies typically spend many millions of dollars to find the next big profitable discovery. Other countries or competitors may very well save considerable time and money and gain a competitive edge, or advantage in a bidding war, by employing cyberspies to steal such valuable information.

Although the Monitor article suggested China could be the culprit behind the cyber attacks on the U.S. oil companies, there's no real evidence of China's involvement.

With the country's economy consuming huge amounts of energy, China has been among the most aggressive in grabbing available resource base around the world.  As such, it is probably not a surprise that China will be inclined to impose harsh punishment to anyone that Beijing perceives as undermining this endeavor.

Xue's eight-year sentence is actually consistent with the four employees of mining giant Rio Tinto (RTP: 46.12 +1.79 +4.04%), including one Australian national. The four received jail terms ranging from seven to 14 years earlier this year on bribery and trade secrets charges.

The Associated Press said the U.S. Embassy issued a statement calling for Xue's immediate release and deportation to the United States.

Meanwhile, the NY Times described "American officials reacted with dismay and puzzlement" to the eight-year prison sentence imposed, which seems like a case of amnesia, since the U.S. is no stranger to the heavy jail terms typically handed down to spies, even in economic cases.

Nonetheless, this case does punctuate the global battle over scarce resources, and the wrath of China if Beijing senses a threat to its national interest.