China: Oil Workers Revolt Over Drilling Rights

BEIJING -- Their battle cry was ''Get to Work'' and they came in three shifts, but the Chinese oil drillers weren't brandishing their crowbars and wooden sticks as tools.

The 400-man brigade swarmed over and smashed police cars guarding state-owned oil fields as they laid down their claim to drilling rights late last month on behalf of a firm backed by the local government.

When the workers dispersed and the dust settled, around 30 injured patrolmen crawled out of their deformed vehicles, some with baseball-sized holes in their safety helmets.

The clash in the northwestern city of Yanan, the cradle of Mao Zedong's Communist revolution, could be a sign of things to come as China opens its markets, cuts tariffs and drops import barriers as a new member of the World Trade Organisation.

Many fear social unrest will proliferate in the hinterland as Beijing closes inefficient, illegal or unsafe producers and lays off tens of millions of workers as it restructures fragmented industries like coal and petrochemicals to fend off foreign competitors.

The November 19 incident, still under investigation, was the latest flare-up in the Yanan county of Ansai between local government oil men and state conglomerate Changqing.

''But it's never been this serious,'' an official at the Ansai County Oil Drilling Company, which admits spearheading the attack, told reporters.

The disputed fields lie some 50km from the caves in Shaanxi province where Mao, seeking a safe haven after the 1934-36 Long March, coined the phrase ''serve the people.''

The locals, booted from the fields on a daily basis before violence broke out, stewed over a lag in implementing a special 1994 deal aimed at breaking up Changqing's legal monopoly over the poor region's chief natural resource.

''They are a powerful and bullying state-owned giant and they have state media on their side,'' the Ansai official said.

Changqing's parent, state giant PetroChina, tells a different story.

''The nature of this is very clear,'' PetroChina Deputy Director-General Cao Yanzheng told reporters. ''We own the rights to these deposits and they infringed on those rights. Then they took violent action, so that's a further violation of the law.''

Malcontent workers and feisty local outfits have long coveted the oil in northern Shaanxi.

At least a decade ago, a slew of drillers sponsored by local governments began to carve pieces of the pie away from sheepish state monoliths illegally. Little regulated, they compounded Yanan's economic and social
turmoil by plundering the wells.

The State Council, China's cabinet, intervened in 1994, brokering a deal that opened 500 sq km of Changqing land in six Yanan counties to other drillers.

Called Agreement 413, it was to be a ''land for peace'' trade-off, said the Guangzhou-based newspaper Southern Weekend.

Yet certain boundaries were never finalised and drillers like Ansai had yet to cash in.

''The central government stepped in to broker the 413 Agreement, but that didn't stop the violence,'' said a Yanan police chief, who declined to give his name.

Two of the 33 Changqing security personnel injured in the November 19 assault were seriously hurt, according to the respected Beijing-based magazine Sanlian Weekly. Southern Weekend ran photos of their cracked headgear.

Ansai denied it caused the injuries.

''Our people did smash their cars this time, but we did not hurt anybody. We know the law,'' said the official.

In neighbouring areas there have been even fiercer stand-offs involving Changqing, the Yanan police chief told reporters.

''Last year in Wuqi County a peasant was killed,'' he said.

In the middle of the fray is Yanan, a city anxious to protect local interests but keenly aware that regionalism is a sin in the WTO-era akin to feudalism in Mao's heyday.

On the city's other flank lies Changqing, whose huge stake in the area includes a new 720 million yuan ($US87 million), 460-km gas and oil pipeline to PetroChina's petrochemical plant in Xianyang, 250 km south.

Changqing fields produced 4.6 million tonnes of crude oil and 2.056 billion cubic metres of natural gas last year, five times the amount local amateurs could drill, Sanlian said, citing analysts.

Not that Yanan collects taxes from the PetroChina subsidiary.

''We don't end up seeing any local benefits,'' Yanan mayor Zhang Shenian told Sanlian.

Yanan's impotence was reflected by a criminal probe which, according to the police chief, aimed ''not to say who was right and who wrong, but to assess who owes what.''

The incident has dented the armour of a town which still reckons itself a bastion of the collectivist ethics Mao devised there in the 1930s.

''This is simply denigrating,'' fumed mayor Zhang. ''It's hurt Yanan and Ansai county's image.''

The local favouritism and fragmentation underlying the incident could give China a bad WTO image, lamented Southern Weekend.

''As China enters the WTO, and the call for equality under the rubric of market economics is riding high, places which enjoy 'special treatment' will be called into question more and more.''

• 107 Energy