CNOOC dives into Gulf of Mexico

09:01, November 06, 2009      

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China's leading offshore oil producer CNOOC Ltd yesterday said it agreed to buy small stakes in oil assets in the Gulf of Mexico from Norway's Statoil, marking its first entry into oil reserves in the gulf.

CNOOC Ltd, through its subsidiary, OOGC America Inc, has signed an agreement with StatoilHydro for four prospects in the Gulf of Mexico, namely Tucker, Krakatoa, Logan and Cobra, the company said in a statement yesterday.

Through this transaction, the company acquired a 10 percent working interest in each of Krakatoa, Logan and Cobra, and a 20 percent interest in Tucker, said the statement.

Statoil acts as the operator in these four prospects, it said.

CNOOC Ltd did not disclose the price of the deal, but analysts estimated it could be worth up to $100 million.

Analysts said the deal was a routine one for Chinese oil companies, which have accelerated overseas expansion this year, although this is the first time that a domestic company would hold equity in oil assets in the Gulf of Mexico.

"The deal indicates that China is working to diversify its oil supply," said Xia Yishan, an expert at the China Institute of International Studies.

China is now the world's second largest oil importer. At present, the Middle East, Africa and the Asia-Pacific are the three key oil import regions.

With the deal, CNOOC has gained a foothold in the oil-rich gulf, which would facilitate its future development in the region, said analysts.

The Gulf of Mexico holds great potential for oil and gas production and its current output accounts for one-fourth of the US' total.

It is forecast that the annual production of the Gulf of Mexico would reach 1.6 million barrels before 2011 and may climb to 1.9 million barrels before 2013.

"Such a deal (sale of working interest) is usual for assets in the Gulf of Mexico," said Dong Xiucheng, a professor at China University of Petroleum, adding that, with the deal, Statoil would reduce its risks in the development of the assets.

In 2005, CNOOC made a bid to acquire the US oil major Unocal for $18.5 billion, but withdrew finally amid US concerns over the sale of strategic assets to China.

The failure of the Unocal deal had made the company more cautious. From now on, CNOOC will acquire stakes in assets rather than buying an entire company, Fu Chengyu, chairman of the company, said earlier.

The company is now taking a "patient approach" to overseas expansion, said Fu.

CNOOC, together with China's second-largest oil company Sinopec, in July agreed to buy a stake in an Angolan oil block from US oil major Marathon Oil.

The Chinese companies would form a 50-50 venture and pay $1.3 billion for a 20-percent stake in the highly prospective block, which has already yielded 12 discoveries.

State-owned companies have successfully made seven acquisitions of overseas oil and gas assets worth a total of 82 billion yuan by September, according to a report by China National Petroleum Corp (CNPC).

This represents an 80-percent increase compared with the same period last year, it said.

Source:China Daily
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