Thursday, August 04, 2005
LexisNexis(TM) Academic - Document
Copyright 2005 Singapore Press Holdings Limited
The Straits Times (Singapore)
August 4, 2005 Thursday
SECTION: World
LENGTH: 518 words
HEADLINE: Unocal episode won't stop Chinese oil firms' foreign hunt
BYLINE: Tschang Chi-chu , China Correspondent
BODY:
BEIJING - STATE-owned energy company CNOOC's spectacular failure to acquire American oil firm Unocal is merely a speed bump, rather than a brick wall deterring Chinese oil companies from making acquisition of foreign oil assets down the road.
On Tuesday evening, China National Offshore Oil Corp (CNOOC) withdrew its US$18.5 billion (S$30.8 billion) bid for California-based Unocal. It blamed the political opposition on Capitol Hill for scotching the deal.
'CNOOC lost a battle but will continue to look for foreign overseas assets, as will the other Chinese oil companies,' said Mr Kurt Barrow, a senior partner with energy consulting firm Purvin & Gertz, referring to Chinese state-owned rivals PetroChina and Sinopec.
Never before has a Chinese company offered so much for a foreign company as CNOOC did for Unocal. But with US$711 billion in foreign currency reserves saved up in the bank, Beijing is not shy about spending some of that money to secure strategic oil and energy resources.
The Chinese economy's appetite for energy outgrew its domestic oil production capacity in 1993, forcing local oil companies to venture overseas for oil.
China is expected to import 130 metric tonnes of crude oil this year. This will satisfy only 43 per cent of the world's second largest oil consumer's total need.
The quest for oil has already taken China to pariah nations such as Sudan, Iran, Syria and Myanmar, where it would not have to compete with the United States - the world's largest oil consumer.
'China didn't realise that we wouldn't have enough oil to fuel our economic development until relatively late, so that when we go overseas now to secure sources of oil, the US, Japan and other developed nations already have a presence in the best places,' said Mr Tan Zhuzhou, honorary chairman of the China Petroleum and Chemical Industry Association.
The next possible targets for acquisition may be located in the Middle East, Kazakhstan or West Africa, where Sinopec and PetroChina already have a presence, according to analysts.
For example, PetroChina has expressed interest in buying Calgary-based PetroKazakhstan, which has oil fields in Kazakhstan.
However, in light of CNOOC's unsuccessful attempt to buy Unocal, Chinese companies may be more reticent about paying billions of dollars for oil assets.
DBS Vickers oil analyst Gideon Lo said that CNOOC and other oil firms would continue to look at potential investment projects, but 'the scale will not be that big in size'. He added: 'After the Unocal issue, they may have to take a step back and take a look at the global environment before they do such kinds of mega-size acquisition.'
Chinese oil firms can opt to buy individual assets, such as oil fields, or parts of companies - a strategy they have pursued with greater success.
CNOOC's Hong Kong-listed shares rose as much as 5.5 per cent after the opening bell, before closing at HK$5.55 (S$1.19) a share yesterday.
Investors were finally able to breath a sigh of relief after worrying for the past six weeks that CNOOC would overpay for Unocal.
LOAD-DATE: August 3, 2005
The Straits Times (Singapore)
August 4, 2005 Thursday
SECTION: World
LENGTH: 518 words
HEADLINE: Unocal episode won't stop Chinese oil firms' foreign hunt
BYLINE: Tschang Chi-chu , China Correspondent
BODY:
BEIJING - STATE-owned energy company CNOOC's spectacular failure to acquire American oil firm Unocal is merely a speed bump, rather than a brick wall deterring Chinese oil companies from making acquisition of foreign oil assets down the road.
On Tuesday evening, China National Offshore Oil Corp (CNOOC) withdrew its US$18.5 billion (S$30.8 billion) bid for California-based Unocal. It blamed the political opposition on Capitol Hill for scotching the deal.
'CNOOC lost a battle but will continue to look for foreign overseas assets, as will the other Chinese oil companies,' said Mr Kurt Barrow, a senior partner with energy consulting firm Purvin & Gertz, referring to Chinese state-owned rivals PetroChina and Sinopec.
Never before has a Chinese company offered so much for a foreign company as CNOOC did for Unocal. But with US$711 billion in foreign currency reserves saved up in the bank, Beijing is not shy about spending some of that money to secure strategic oil and energy resources.
The Chinese economy's appetite for energy outgrew its domestic oil production capacity in 1993, forcing local oil companies to venture overseas for oil.
China is expected to import 130 metric tonnes of crude oil this year. This will satisfy only 43 per cent of the world's second largest oil consumer's total need.
The quest for oil has already taken China to pariah nations such as Sudan, Iran, Syria and Myanmar, where it would not have to compete with the United States - the world's largest oil consumer.
'China didn't realise that we wouldn't have enough oil to fuel our economic development until relatively late, so that when we go overseas now to secure sources of oil, the US, Japan and other developed nations already have a presence in the best places,' said Mr Tan Zhuzhou, honorary chairman of the China Petroleum and Chemical Industry Association.
The next possible targets for acquisition may be located in the Middle East, Kazakhstan or West Africa, where Sinopec and PetroChina already have a presence, according to analysts.
For example, PetroChina has expressed interest in buying Calgary-based PetroKazakhstan, which has oil fields in Kazakhstan.
However, in light of CNOOC's unsuccessful attempt to buy Unocal, Chinese companies may be more reticent about paying billions of dollars for oil assets.
DBS Vickers oil analyst Gideon Lo said that CNOOC and other oil firms would continue to look at potential investment projects, but 'the scale will not be that big in size'. He added: 'After the Unocal issue, they may have to take a step back and take a look at the global environment before they do such kinds of mega-size acquisition.'
Chinese oil firms can opt to buy individual assets, such as oil fields, or parts of companies - a strategy they have pursued with greater success.
CNOOC's Hong Kong-listed shares rose as much as 5.5 per cent after the opening bell, before closing at HK$5.55 (S$1.19) a share yesterday.
Investors were finally able to breath a sigh of relief after worrying for the past six weeks that CNOOC would overpay for Unocal.
LOAD-DATE: August 3, 2005
# posted by Eastlaw @ 3:56 AM 
