Today, European oil companies have established themselves as the most active participants in China’s oil sector, providing financial investment, technology, and competition to the world’s second largest oil consumer. Indeed, European presence in Shanghai and the rest of China has since morphed into a less prominent kind, one that is less offensive to the national conscience of the Chinese.

China’s energy diplomacy regarding Europe seems almost simple compared to the politically sensitive love-hate relationship between China and the United States.

Major European energy companies choose to establish joint ventures in China, providing technology for upstream exploration and production, refining petrochemicals, or taking over retail outlets to distribute oil products. Shell is one of the biggest foreign investors in China’s oil business. In Eastern China’s Jiangsu Province alone, Shell jointly owns over 500 gasoline stations; in southern China’s Guangdong Province, it owns a 50 percent share of the $4.3 billion Nanhai petrochemical project.

The world’s fourth-largest oil company, French-based Total, set up business in China over 27 years ago. It has since established its own extensive network of over 30 wholly-owned or joint venture companies in China.

Foreign energy companies have most of their weight in China’s offshore upstream sector. Of China’s 50 offshore oil and gas fields, 27 are jointly owned or operated by CNOOC and foreign companies, including many big European names such as Shell, BP, Eni (formerly Agip), and Statoil.

Onshore, the foreign companies’ upstream joint ventures have yet to make a real impact. In the first six months of 2007, crude output involving foreign investment amounted to a meager 3.7 million tons, or 0.4 percent of China’s total crude output.

Compared to the U.S., Europe enjoys less complicated political ties with China, and thus has fewer sensitive triggers that would tend to impede business ventures. This relaxed political environment has lead to a far more pragmatic business environment for both European and Chinese energy companies.

By contrast, between Beijing and Washington, oil is politics. The unspoken and sometimes ineffable political tensions between China and the U.S. showed their face in 2005, when China’s CNOOC was forced to withdraw its winning bid for California’s Unocal. While the U.S. and China debate issues like national energy security and trade balance, the latest European-Chinese frictions involve the E.U.’s frustration with China’s lack of effective policies to cut harmful emissions – a less delicate and perhaps less confrontational issue.

The cordially low-key relationship between China and Europe serves both sides well. On the one hand, the relationship will not become as complicated as others because of the lack of crude trade between them; on the other hand, their relatively straightforward partnership facilitates mutual involvement in the overall energy sector.