China National Petroleum Corp., the country’s biggest oil company, is seeking its first stake in the U.S. as Chinese explorers with $40 billion of cash try to join an energy renaissance unlocking billions of barrels of crude.
“We are currently studying” investing in U.S. oil, Jiang Jiemin, chairman of the state-run company, said yesterday at the National People’s Congress meetings in Beijing. Domestic rival China Petrochemical Corp. last month agreed to buy stakes in an Oklahoma field from Chesapeake Energy Corp. (CHK) for $1.02 billion.
Chinese oil companies using government loans want stakes in shale fields that are fostering the most crude production in the U.S. in 21 years and helping wean it off Middle Eastern imports. They’ll be guided by the experience of China’s Cnooc Ltd. (883), whose $19 billion bid for Unocal Corp. was blocked by U.S. lawmakers eight years ago. Cnooc last month won U.S. approval for a $15.1 billion purchase of Nexen Inc. (NXY), albeit with curbs on operating the Canadian company’s Gulf of Mexico fields in U.S. waters.
“Stake participation by Chinese companies in U.S. oil fields would be welcomed,” said Will Pearson, a London-based analyst for Global Energy & Natural Resources at Eurasia Group. “Full buyouts will continue to be scrutinized and opposed.”
While China is taking over entire oil and gas fields from Canada to Latin America, Africa and Australia, such purchases in the U.S. may prove challenging because of political opposition, Pearson said. The world’s biggest economy is curbing Chinese deals when the targets are close to military installations or have access to certain kinds of technology. Growing concerns over intellectual property theft and cyber-attacks also have fueled scrutiny of Chinese acquisitions.