China’s Oil Enterprises Overseas Acquisition Of A New Chess Game

A few years ago, China’s overseas acquisitions of oil companies mostly concentrated in Africa, Central Asia and Latin America and other regions, public information, Africa, Sudan, Nigeria, Angola, Kazakhstan, Central Asia, Latin America, Venezuela, Oman, Middle East and Southeast Asia Indonesia and Oceania, Australia and other countries, China’s overseas oil and gas account for most of the upstream business. And downstream, China addition to or in some Asian and African countries have a small amount of oil refining business in the shares only in the Sudan has established a vertically integrated project.

China’s current partner countries are gradually expanding the scope. In the recent acquisitions, in addition to traditional oil-producing countries but also in some developed countries involved in the oil business. Some experts, this is the development of China’s oil enterprises to a certain extent inevitable choice, but also to speed up the pace of internationalization of the objective needs.

China Petroleum and cadre management professor Han said that, international companies generally three steps in the globalization strategy, the first step yes passive globalization, that is “bringing in”, that is using its own resources to attract foreign capital and advanced technology performance in China’s oil industry, this stage is from 1982 to 1993. The second stage is the active globalization, that is “going out”, in 1993 China became a net oil importer after China, led by the Chinese petroleum enterprises will be taking the oil “going out” pace. The third step is to build a global enterprise, using the world’s resources allocation. “Right now oil companies are in the second step to third step of the transition process. Therefore, the Chinese oil companies overseas acquisition target country, from the expansion of developing countries to developed countries before, is a natural thing.” Han said.

Han Xuegong with similar views were held in Xiamen University, China Energy Economic Research Center Lin Boqiang, he said the reason for China to buy some developed countries, the current oil assets, partly because the lower international oil prices recently, which is a good time, the other is China now has more adequate funding reserves have to buy power.

Indeed, the strength to go abroad for our oil companies continue to accumulate in recent years growth, 2009 “Fortune” 500 companies, Sinopec to 207.814 billion U.S. dollars sales revenue ranked 9th for the first time into the top 10 ranks, while China Petroleum Zeyi 181.123 billion U.S. dollars in sales ranked 13th. The 2008 ranking of the two companies were only 16 and 25. “Strength of growth, largely encouraged by the courage of Chinese enterprises developed out of M & tentacles.” Commented one industry so.

NDRC Energy Institute senior Gu Wen Zhou Fengqi Biaoshi: “Fadaguojia terms with better health economic Wen Ding, Fa Lv Ye Bijiaojianquan regulations, in the past reluctant to Chushou to companies in China all kinds of obstacles Xianzaiyuanyi sale for Chinese enterprises to talk is an opportunity. “

However, there are different views on the industry, the Chinese oil experts, Xiao-Jie Xu Institute of Economic and Technology on “energy” magazine reporter, said the acquisition of Chinese enterprises in developed countries, as oil companies, such as Canada, Switzerland, the company acquired is not in fact developed country’s own assets, because these assets are distributed in the Middle East, Africa and other developing countries. Therefore, there is no substantive prior to the acquisition of the distinction.

Mainly from the upstream to both our upstream and downstream oil companies in addition to the acquisition tentacles outside the developed countries, their business is changing, too, from focusing on mergers and acquisitions both upstream and downstream assets to be seen as recent overseas Chinese oil enterprises Another feature of M & As.

July 13, 2009, the Malaysian oil company merapoh Resources announced that the company north of Kuala Lumpur, Malaysia Kedah continue to promote the development of a large refinery project. The total investment of 100 billion, and China Petroleum as its strategic partner to the project which will be involved.

Previously, China planned to invest the British oil group Ineos Grangemouth refinery in Scotland, was widely regarded as a downstream expansion with the intent to occupy a larger overall market strategy.

June 21, 2009, PetroChina completed the Singapore Petroleum 45.51% of the total issued shares after the acquisition news, “Singapore Petroleum will be the implementation of the international strategy of the company’s new platform and will provide a broader foundation for the development and more stable development path. “

Singapore Petroleum is a regional oil company, mainly engaged in refining and marketing, as well as oil and gas exploration, mining and other services. The company owns 50% of Singapore’s oil refining company interests in Singapore Refining Company is one of Singapore’s three major refineries.

Analysts believe that this acquisition can use the other advanced refining technology, a mature sales network and advanced management experience, and gradually mature into the overseas market, the downstream area of distribution, for the Chinese oil business chain lay the foundation for comprehensive development in the overseas.

“The reason the downstream expansion, because of the growing strength of China’s oil companies stronger, more abundant capital, driven by its global sales network. Because in the industrial chain, the sale of the terminal is the most profitable part of.” Said Han Xuegong Analysis , “Comparison of 500 oil companies, their main business is refining and marketing, rather than the upstream mining, exploration and development because of the relatively low added value. China’s oil companies to become global enterprises, must build in overseas upstream and downstream integrated model of development. “

China Petroleum Technology Research Institute of Economy experts Xiao-Jie Xu also said that oil companies developed to a certain extent, in the “going out” process, will wish to establish an integrated enterprise, especially in establishing their own sales networks overseas.

Perhaps, now China’s oil company shares lower in overseas acquisitions and the company is just the beginning, with their own strength to further strengthen and build international business strategy, the gradual deepening of this trend is likely to accelerate.

To joint action by the man operation from a consortium of the China Petroleum and BP, the joint bid pull oil to PetroChina and China Petroleum CNOOC Baotuan expedition Argentina; from Sinopec and CNOOC jointly won hands from the marathon Angola Block 32 oil field. Not difficult to see, with the Chinese oil companies overseas experience and project the increasing maturity of the operation, its tactics are from the previous joint action-man operation gradually.

Experts said the oil industry has “a long four-high” characteristics, namely high input, high-yield, high-tech, high risk and long period. These characteristics determine its joint acquisition is the best choice. For smaller projects, acquisition of normal single, but involved a large amount of complex projects, usually in a joint takeover approach, which is common practice in the international oil companies. For example, in Iraq, along with the reason why China Petroleum and BP signed a service contract, because “the area too risky, do not eat into a company,” said Han Xuegong.

Sinopec Research Institute of Petroleum Exploration and Development, said a senior expert of resistance, “the country from the resource perspective, the current wave of accelerating nationalization, cooperation forms, resources, most countries no longer use into an agreement form. So companies face the risk of overseas acquisitions gradually increased to the joint acquisition of risk-sharing. “

However, in the “going out” process, China’s oil companies in a very long time, not with other companies to adopt “the same action”, both within our oil companies, or with the multinationals, a few years ago Bing Gouzhong alliance cases are relatively rare.

In recent years, China Petroleum and Sinopec, under the coordination of national policy, overseas co-operation of the project began to increase. China’s two major oil companies has gradually strengthened the cooperation between, in the joint bid for the Sudan, Peru and other countries for oil blocks were awarded the benefits.

In cooperation with the international oil giants, a few years ago China’s oil companies have little chance. As in recent years, China’s oil enterprises to grow and, in cooperation with international oil giant’s attitude changed. They ignored the first, and now has become very real.

Now, with China’s oil companies are continuing to grow, and the transnational oil giant increased cooperation, according to Road District Xiangguanrenshi Total Group Introduction of China, China Hai You TOTAL Yu a cooperation project in Nigeria Yi Jing production, another is Ping Gu Zhi in. In Yemen, Sinopec and Total, the cooperation of the two blocks are in progress.

Shortly afterwards, China Petroleum and BP joint bid for success in Iraq, in large and multinational oil companies in China indicates that the oil giant in the international cooperation on the project is moving toward a new stage. “Whether the cooperation between the two, mainly to see if there is common ground and interests.” Industry source said.

There will also be cooperation in competition. When the Chinese oil companies to go abroad, the international oil market, tried his hand at the time, certainly in competition with multinational oil giants and the divergence of interests. A British media bluntly pointed out that in the future, China and Western companies are likely to start in direct conflict. So, the future of oil companies and foreign relations in the international market, how will the evolution of each other as a partner or rival? In any case, it must be recognized that the 21st century is the century of cooperation, and cooperation is win-win situation, the conflict will not solve the problem.

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