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2009: A Chinese Energy Acquisition Odyssey

Oct. 16, 2009 8:42 AM ETCEO, CIEGF, CKKHY, SHIIY5 Comments

China’s Powerful State-Owned Enterprises Scour the Globe in a Bid to Quench the Country’s Insatiable Thirst for Oil & Gas

News reports over the past few weeks of two potential multi-billion dollar Chinese oil deals in Africa, and another significant gas-related acquisition in Kazakhstan, only further reinforces China’s insatiable appetite for energy.

The recent news that China, through one of its state-owned enterprises, is a likely bidder for 23 oil blocks in Nigeria, for up to a staggering US$ 30 Billion, and another, separate $5 billion deal in Uganda, certainly caught the eye of the international community.

However, while the intricacies of these potential deals are interesting in their own right, their significance is that they are only part of a much larger story. While this may seem like a short-term flurry of deal making, it is simply the continuance of feverish activities by the Chinese to secure oil & gas over the past few years, and most notably, in the year-to-date 2009.

To begin, it is important to note that China’s resource ambitions are being effected, on behalf of the Chinese government, primarily by five state-owned enterprises: (1) China Petroleum & Chemical Corporation (“Sinopec”) (SHI); (2) China National Offshore Oil Corporation (“CNOOC”) (CEO); (3) China National Petroleum Corporation (“CNPC”) (OTC:CKKHY); (4) China Investment Corporation (“CIC”) (OTC:CIEGF), China’s sovereign wealth fund; and, (5) PetroChina, which is a subsidiary of CNPC.

Exhibit 1: Chinese Entities Involved in Overseas Oil & Gas Acquisitions

Exhibit 1

Although details are still being clarified on the Nigeria deal, CNOOC, China’s top offshore producer, is reportedly in discussions with Nigeria government to acquire stakes in 23 prime oil blocks, with up to 6 billion barrels of oil, for up to $30 Billion. By any measure, this could be a massive deal. By comparison, China’s failed attempt to acquire US-based

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Comments (5)

Trinvester profile picture
China is using its state agencies as brokers for its US debt by firstly purchasing it from the Americans and then exchanging it around the world for mineral assets. when the US$ goes bust, which at this rate seems sooner than later, China is ensuring that its not left holding a mountain of money thats no longer worth the paper it was printed on, but rather interestes in energy and mineral depostis around the world. by trading US currency for hard assets its effectivey hedging against the inevitable inflation and protecting itself from the strong monetary bond it has created by becomming the largest holder of US currency outside of the US.
Hey, you can certainly trust the upwardly moving charts of CEO and PTR

On Oct 17 05:17 AM bindlepete wrote:

> I wish I could trust Chinese accounting. Then I can't trust ours
> either.
I wish I could trust Chinese accounting. Then I can't trust ours either.
Ferdinand E. Banks profile picture
So China is going to solve its energy problem in Africa. Well, I guess that Barnum was wrong. A sucker isn't born every minute, as he claimed, but every second.
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