Chinese oil firm hunts for overseas assets even as deal making falls to 10-year low amid stricter scrutiny
- Chinese firms reach 14 deals so far this year, the lowest in the last 10 years
- In terms of value, the US$2.36 billion concluded so far is the smallest in the last 11 years
China’s overseas oil and gas acquisitions fell to their lowest level in a decade, as volatile oil prices and geopolitical headwinds made deal making harder for Beijing, but state-backed firms are undeterred in their plans.
Some 14 deals worth US$2.36 billion have been recorded so far this year – a second year of declines, according to Refinitiv data. If there are no agreements in the next three weeks, this year will rank as the lowest in terms of number of deals in the last 10 years and the smallest by value in 11 years.
The record level of dependence on imports has accentuated China’s strategic need to acquire assets overseas to enhance energy security.
“The balance sheets of the big three Chinese state-backed oil majors have never look better, with a combined cash pile of 500 billion yuan [US$72.3 billion] and their net debt leverage at the lowest level in many years,” said Sanford Bernstein senior analyst Neil Beveridge.
“But the politics and rising resource nationalism in developed markets like Canada and Australia have definitely become more difficult while the US is clearly off limits.”