Chinese oil giant CNPC seen buying more overseas energy assets

Oil and gas fields owned by Exxon and Rosneft seen as possible targets of mainland producer

PUBLISHED : Wednesday, 07 August, 2013, 12:00am
UPDATED : Tuesday, 03 September, 2013, 1:02pm

China National Petroleum Corp has already spent more money this year on energy assets than any other global producer. Oil and gas fields controlled by Exxon Mobil and Russia's Rosneft may be next on the list.

CNPC, the mainland's largest oil producer, has made more than US$9 billion of purchases this year - and has considered a further US$4 billion, according to people familiar with the matter - as part of a plan to double overseas output by 2015.

Spending was likely to accelerate under Zhou Jiping, who was named chairman in April and has more than a decade of experience in international operations, CLSA Asia-Pacific Markets said.

CNPC is ramping up deals to make up for lost ground after Sinopec and CNOOC, two other state-owned energy companies, outspent the producer by about US$50 billion on overseas transactions in the past five years.

CNPC's success with mature fields made an Exxon asset in Iraq a target, Sanford C Bernstein said, while a supply agreement with Rosneft may lead to deals with the state-controlled Russian producer, according to UOB Kay Hian.

"CNPC's skill set makes it a good fit for many developed onshore oilfields in central Asia, the Middle East and South America," said Neil Beveridge, an oil and gas analyst at Bernstein. "CNPC's state-owned background is more of a bonus rather than a burden when it seeks acquisitions in those regions."

At its Daqing field, discovered in Heilongjiang province in 1959, CNPC had gained "world class" experience at extending the life of oilfields, Beveridge said.

The company also drills for oil in Syria, Sudan, Iraq and several central Asian countries.

CNPC plans to increase overseas production to 200 million tonnes by 2015, about twice what it produced abroad last year.

Output from fields outside the country might account for 60 per cent of production by the end of the decade, former chairman Jiang Jiemin said in January. The proportion was 37 per cent last year.

Jiang this year became the head of State-owned Assets Supervision and Administration Commission. His replacement, Zhou, previously led CNPC's overseas division.

"Zhou's expertise in international business will help CNPC's international expansion," said Simon Powell, an analyst at CLSA.

Liu Weijiang, CNPC's Beijing-based spokesman, said the company does not comment on speculation.

To supply the world's largest consumer of energy, mainland companies announced at least US$108 billion of overseas purchases in the past five years, about 20 per cent of the total spent by energy companies worldwide on cross-border acquisitions.

While CNPC spent more than US$16 billion, Sinopec - officially known as China Petrochemical Corp - and CNOOC, the country's second and third-biggest oil and gas producers, spent US$41 billion and US$26 billion respectively. The CNOOC total includes purchases by parent China National Offshore Oil Corp.

This year, CNPC has struck at least US$9 billion of deals, including a US$4.2 billion purchase of a stake in Mozambique's Rovuma fields.

The firm was considering buying Petroleo Brasileiro assets in Colombia and Peru with a value of about US$2 billion, sources said last month.

CNPC also held talks to buy Brazilian oil startup Barra Energia Petroleo e Gas for about US$2 billion, sources said in May.