China National Petroleum Corp's (CNPC) winning of the right to develop the largest oilfield in Iraq, the world's third-largest oil reserve holder, is the latest and most potent indication of Beijing's intention to scour the world for energy resources to feed its rapidly growing economy.
Analysts attributed the state-owned oil giant and British oil major BP's edging out Exxon Mobil Corp and Malaysia's Petronas to CNPC's higher risk appetite than its western peers.
'This deal is very positive for China's long-term energy strategy,' said Mirae Asset Securities head of Asia energy research Gordon Kwan. 'If even Exxon Mobil is willing to bid, it tells you that it is a lucrative deal, but perhaps its risk appetite is not as high as CNPC's.'
He said CNPC's financial strength, backed by China's huge foreign exchange reserves, and BP's technical expertise had made them a team to beat.
Their bid to develop the Rumaila field to output 2.85 million barrels a day at US$3.99 each trumped Exxon Mobil and partner Petronas' bid to produce at a higher rate but for a more expensive US$4.80 a barrel.
While financial arrangements in the bid were not disclosed, analysts believe that state-owned CNPC may be shouldering greater risk than listed BP.
'CNPC as a state company can bear higher political risk and lower return because of its national energy security agenda, but the western companies consider risk and return purely from a commercial angle,' said Wang Aochao, an analyst with UOB Kay-Hian in Shanghai.