Weeks after CNOOC's failed US$18.5 billion bid for US-based Unocal, China National Petroleum Corporation reached an agreement to buy Canadian-based firm PetroKazakhstan Inc for US$4.18 billion, China's first successful acquisition of a foreign-listed company and its largest foreign acquisition to date. The deal, however, requires shareholder approval in a vote expected in October, and CNPC's Indian rival, state-run Oil and Natural Gas Corporation, has reportedly said it may offer a counter-bid, in which case it would pay CNPC US$125 million in "break-up" fees.
At US$55 per share, some say CNPC over-bid, but for oil-thirsty China, the move was strategic; it was willing to pay a premium for energy assets in Kazakhstan, which is expected to become one of the world's leading oil producers.
China also beat Japan in the tug of war for the route of the trans-Siberia multibillion-dollar oil pipeline to first go to China, then later to the Pacific coast where the oil would be shipped to Japan, the Wall Street Journal reported. Russian President Vladimir Putin said oil shipments would initially go to China's oil center in Daqing though he also made clear that Russia is not putting all its eggs in the Chinese basket. "We want to sell to the whole Asia-Pacific region," he reportedly said. With completion expected in 2008, the trans-Siberian pipeline will eventually pump up to 1 million barrels of oil to East Asia daily.
Japan protests over energy field
Japan made a fresh protest against China over a disputed energy field in the East China Sea, saying that Beijing may be set to pump gas out of the area, the Standard of Hong Kong reported. China last month protested Japan's decision to give permission to Tokyo-based Teikoku Oil to explore the disputed area. It was the first company to be granted a permit since Japan decided in April to open the area to drilling, ending decades of hesitation.
CNOOC to build its first refinery
China National Offshore Oil Corp (CNOOC) signed a US$2.47 billion agreement with US-based WorleyParsons Energy Services LLC to build its first refinery in Guangdong Province, marking CNOOC's move to engage in both upstream oil and gas exploitation and the downstream refining business. The construction of the refinery, with a capacity to process 12 million tons of crude oil annually, is expected to be completed by mid-2008, state media reported. The plant will be one of the country's largest, rivaling Sinopec's five refineries with an annual crude processing capacity estimated to be at least 10 million tons.
CNPC to develop Venezuela oil fields
China National Petroleum Corp (CNPC) signed an agreement with the Venezuela state oil company, Petroleos de Venezuela SA (PDVSA), to develop and manage Venezuela's Zumano oilfields in the eastern part of the country. The Zumano area has 400 million barrels of light and medium crude and 4 billion cubic feet of gas reserves, according to PDVSA. Venezuela expects to supply about 15-20% of China's oil import by 2012, or 300,000 barrels of crude a day, from the current level of 68,800 barrels a day. The two companies are also studying a possible refinery project in China, PDVSA said. Separately, PDVSA set up a branch office in Beijing.
Shell agree to oil-shale JV
A Chinese unit of Royal Dutch Shell signed an agreement with Jilin Guangzheng Mineral Development Co to set up Jilin Shell Oil Shale Development Co, a joint venture that will develop oil-shale deposits in northeastern Jilin province, the Wall Street Journal reported. Shell will hold 61%, while Jilin Guangzheng Mineral will own the remainder. The two companies will invest a combined total of $150 million in the new company.
Oil prices won't curb China's growth
The Asian Development Bank said rising oil prices will probably not restrain the strong economic growth in India and China. Bank President Haruhiko said that while surging prices have affected the world economy, China and India are growing robustly despite the oil prices hike. The Manila-based bank predicted that Asian developing nations would grow at a collective 6.5% this year.
PetroChina raises US$2.18bn
PetroChina Co, China's biggest oil company, sold 3.16 billion Hong Kong shares at US$0.77 apiece – the top end of their range, raising almost US$2.2 billion late August. The company was seeking to increase cash reserves to go after increasingly high-priced oil supplies.
CNPC boosts oil and gas reserves
China National Petroleum Corporation (CNPC) increased its oil reserves by 300 million tonnes and gas reserves by 150 billion cubic meters, state media reported. Major discoveries made by the company, which plans to invest US$18.9 billion this year in domestic resource exploitation, include 200 million tonnes of oil in the Jidong field of the Bohai Bay Basin and 100 cubic meters of natural gas in the Songliao Basin in northeast China.
Datang to invest in three power plants
Datang International Power Generation has been given clearance to build three new power plants in Fujian, Guangdong and Zhejiang provinces at a total cost of US$2.6 billion. The Beijing-based company said in a statement that the new plants, in which it will hold majority stakes, will add 4,800 megawatts to its current capacity of 11,250 megawatts. Already China's second-largest listed electricity supplier, Datang plans to almost double its capacity to 20,015 MW in 2006 to meet soaring demand.
BP enters Shanghai market
BP China announced plans to bottle liquefied petroleum gas in Shanghai after merging its BP LPG China unit with Waisihot Gas, a Shanghai-Hong Kong joint venture, and local company Baocheng Gas. BP will be able to supply between 35,000 and 40,000 tons of bottled LPG annually.