China’s foreign oil and gas mega-spree

No doubt about it: China’s national oil companies (NOCs) have been making some very big foreign acquisitions in the past 18 months:

In fact, Wood Mackenzie says China actually accounted for a decent portion of total world M&A last year, across all sectors:

And that figure is even higher this year:

Based on data from Wood Mackenzie’s M&A Service, we estimate the three Chinese companies accounted for nearly 20% of global deal value in the first quarter of 2010.

However, as WoodMac notes, China’s NOCs are also coming up against other NOCs, for example in Angola where a Sinopec/CNOOC attempt to buy a stake in a block from US-based Marathon Oil was pre-empted by local NOC Sonangol. There was, according to the analysts, a likely political motivation with the Angolan government keen to reduce its reliance on Chinese investment. Iraq’s government, too, blocked Sinopec from its 2009 oil bidding round for political reasons, albeit of a different sort: this was because the Chinese NOC had bought small oil company Addax, which has significant holdings in Iraqi Kurdistan.

Another trend they identify is a tendency for Chinese NOCs to team up with international oil companies, oil companies such as BP, Total and BG, which it has done in Iraq, Australia and – possibly – Uganda.

This is perhaps not unrelated to the political opposition China is beginning to encounter, as we’ve written before.

Related links:

Getting cosy with China on energy deals - FT Energy Source

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