Study notes global growth of Chinese NOCs

By OGJ editors
HOUSTON, June 17
-- Aggressive asset purchases and mergers will push net overseas oil and gas production by China’s three large national oil companies (NOCs) to a record 1 million boe/d this year, says a study by Wood Mackenzie.

And aggressive business activity continues for China National Petroleum Corp. and its overseas unit PetroChina, Sinopec Group, and China National Offshore Oil Corp.

WoodMac called international activity by those companies over the past 12 months “intense.” A press statement said the study expects “high levels of international business activity to persist but with an increasingly multidimensional and aggressive approach to asset acquisition combined with higher levels of partnership with [NOCs] and international players.”

Norman Valentine, senior analyst on the firm’s corporate analysis team, said the three Chinese NOCs “have committed nearly $25 billion to asset and corporate acquisitions since April 2009, far exceeding previous annual spending.”

He estimated that the companies accounted for nearly 20% of global deal value in this year’s first quarter.

“With large-scale deals of over $9 billion committed so far in 2010, we expect the Chinese NOCs to maintain high levels of deal activity,” he said, saying motivations include Chinese oil-demand growth and concern about overreliance on oil from the Middle East. “With healthy cash-flow generation, strong balance sheets, and implicit financial backing from the Chinese government, they remain well placed to continue overseas growth through asset purchases and corporate deals.”

The report estimates that the Chinese NOCs have accessed 2 billion boe of commercial oil and gas reserves in the past year.

It says the companies increasingly target unconventional resources and LNG and seek discovered-resource opportunities as well as resource-holding NOCs and partnerships with international oil companies.

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