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CNOOC seals Nexen acquisition (2)

By Song Shengxia (Global Times)

08:55, February 27, 2013

"Chinese companies have encountered a lot of obstacles in investing abroad partly because they are ignorant of foreign laws, culture and customs, and partly because foreign companies are hostile to Chinese companies and reluctant to trust their Chinese counterparts," Yang Hongwei, director of the energy efficiency center at the National Development and Reform Commission, told the Global Times.

The closing of the deal came as Nexen reported a net loss in the fourth quarter worth C$6 million ($5.9 million) on Monday, compared with a profit of C$43 million in the same period of the previous year.

"It is too early to conclude whether the deal is worth the money. The companies that are being sold are usually not performing very well in the market. The biggest challenge for CNOOC is how it can manage and develop the newly acquired asset over the next 10 years," Lin said.

The deal also came after the China Petrochemical Corporation (Sinopec) announced Monday it would purchase 50 percent of the stakes of the US' second-largest national gas developer, Chesapeake Energy Corporation, in its oil and gas assets in Oklahoma at $1.02 billion.

China's three major energy companies - Sinopec, CNOOC and China National Petroleum Corporation - closed acquisition deals overseas worth a total of $25.4 billion in 2012, exceeding the value in the previous years, the Xinhua News Agency reported earlier this month.

"Chinese companies should aim to achieve success in investing abroad instead of seeking large-value deals. In doing so, they must try their best to get familiar with host countries' investment environment, legal system, financial markets and customs to prepare them for any potential risks," Xu Baoli, director of the Competitiveness Research Department of the State-owned Assets Supervision and Administration Commission, told the Global Times.

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