Sunday, July 29, 2012

China's Economy - Greedy for Oil

China's Gigantic Business Coup


People's Network, Beijing, on July 28, 2012:

Editorial note: On [July] 22 the director's board of Canada's Nexen Oil Company proclaimed having approved the purchase of 66% of [Nexen] shares by China's General Maritime Oil Company for a price of 15.1 billion US $. Canada's television station CTV says if the purchase succeeded, this would mean the Asian company's most significant incorporated buying action in Canada up to now. It would be as well the biggest purchase abroad at one stroke for China's industry of energy resources. Why, after seven years [...], is China's Maritime Oil buying Nexen for another time ? Is there any far-reaching significance in it ?

[Editorial note by Ulysses: China's General Maritime Oil Company is better known as CNOOC = China Offshore Oil Company]


In order to answer the questions asked in the Chinese editorial note above, it is necessary to rely on further information. Some days earlier, on 23 July 2012, "gCaptain", a provider for maritime and offshore news, published an article on the Nexus deal. Some important facts from that article are quoted below:

State-owned CNOOC is China’s largest offshore oil company. The deal will give it ownership of oil and gas reserves in western Canada, the U.K. North Sea, the Gulf of Mexico and offshore Nigeria.

In 2012, approximately 70% of Nexen’s output is expected to come from offshore fields, according to Nexen’s website, making it a good fit for the Chinese company’s offshore fields. In 2011, Nexen produced around 207,000 barrels a day of oil equivalent.

Nexen, which describes itself as a major player in Canada’s oil sands sector, is also a producer of shale gas, in northeastern British Columbia.

In a statement on the Hong Kong stock exchange, CNOOC said it will fund the deal through existing cash resources and external financing. Nexen’s current debt of around $4.3 billion will remain outstanding, CNOOC said.
If the deal is approved by Nexen shareholders, Nexen will become a wholly owned subsidiary of CNOOC, the statement said.

Now it is clear that China's state-run company already owns 33% of Nexen shares. Therefore it is no "second purchase" of the same company but a completion of a gigantic business coup that gives China control over very many oil drilling sites distributed all over the world !

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