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November 6, 2009

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Stakes allow CNOOC to tap US waters

CHINA'S CNOOC Ltd has agreed to buy minority stakes in four exploration licenses in the Gulf of Mexico from a Norwegian oil and gas producer, the first time for a Chinese company to tap reserves in the US waters.

CNOOC will buy 10 to 20 percent share in the exploration areas from Statoil ASA, the Norwegian company said late Wednesday in its quarterly results announcement.

The companies didn't disclose financial details, and analyst Gordon Kwan at Mirae Asset Securities estimates the purchase price is less than US$80 million, a small amount in the Chinese offshore oil major's US$7 billion cash pile.

He said there is no meaningful impact on near-term production or reserves for CNOOC for at least four years because the purchases are merely the rights to conduct exploration in the US.

Still, this could be a win-win arrangement for both companies, according to analysts.

"CNOOC can tap into Statoil's deepwater management expertise, while the latter can lighten up its financial risks," Kwan said. Statoil, the world's largest offshore operator, posted a 40 percent plunge in third-quarter earnings.

Hong Kong-listed CNOOC, which is eying a global portfolio, had in 2005 dropped an US$18.5 billion bid to buy US oil producer Unocal Corp due to stiff American political opposition.

Analysts said they don't believe US politics to obstruct the latest Statoil deal given the small sums involved and the minority role that CNOOC will play as Statoil will remain the projects' operator.


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