Men wearing face masks walk past a China National Offshore Oil Corp (CNOOC) sign outside their headquarters in Beijing, China March 8, 2021. REUTERS/Tingshu Wang
- CNOOC prepares exit from UK, Canada and US – sources
- Beijing concerned about growing tensions with the West
- Production in three countries reached 220,000 boed last year
- The decision follows CNOOC’s delisting from the New York Stock Exchange
LONDON/SINGAPORE, April 13 – China’s leading offshore oil and gas producer CNOOC Ltd. (0883.HK) is preparing to suspend its operations in Britain, Canada and the United States amid concerns in Beijing that the company’s assets could become subject to western sanctions, industry sources said.
Relations between China and the West have long been strained by trade and human rights issues, and tensions have risen following Russia’s invasion of Ukraine, which China refuses to condemn.
The United States said last week China could face consequences if it helps Russia evade Western sanctions, which include financial measures restricting Russia’s access to foreign exchange and making international payments more difficult to process. Continue reading
CNOOC did not immediately comment.
Companies conduct regular reviews of their portfolios, but the proposed exit would come less than a decade after state-owned CNOOC entered the three countries through a $15 billion acquisition of Canada’s Nexen, a deal that saw the Chinese champion a leading global company made producer.
The assets, which include interests in major fields in the North Sea, Gulf of Mexico and major Canadian oil sands projects, produce around 220,000 barrels of oil equivalent per day (boed), according to Reuters calculations.
Last month, Reuters reported that CNOOC had hired Bank of America to prepare the sale of its North Sea assets, which include a stake in one of the basin’s largest fields. Continue reading
CNOOC has launched a global portfolio review ahead of its planned public listing on the Shanghai Stock Exchange later this month, primarily aimed at finding alternative funding options after delisting its U.S. shares last October, the sources said. Continue reading
The delisting was part of a move by former US President Donald Trump’s administration in 2020 to target several Chinese companies Washington said were owned or controlled by the Chinese military. China condemned the move.
CNOOC is also benefiting from a rebound in oil and gas prices sparked by Russia’s February 24 invasion of Ukraine, hoping to attract buyers as western countries seek to develop domestic production to replace Russian energy.
In an attempt to exit the West, CNOOC is looking to acquire new assets in Latin America and Africa, and would also like to prioritize the development of large, new prospects in Brazil, Guyana and Uganda, the sources said.
‘A PAIN’
CNOOC is targeting sales of “marginal and difficult to manage” assets in the UK, Canada and the United States, a senior industry source told Reuters.
All sources spoke on condition of anonymity due to the sensitivity of the subject.
The industry source said last month that CNOOC’s top management, including Chairman Wang Dongjin, found managing the former Nexen assets “inconvenient” compared to developing countries due to bureaucracy and high operating costs.
CNOOC has faced hurdles, particularly in the United States, such as security clearances Washington requires for its Chinese executives to enter the country, the source added.
“Facilities like the deep water Gulf of Mexico are technologically challenging and CNOOC really had to work with partners to learn, but company executives weren’t even allowed to visit the US offices. It’s been a pain all these years and the Trump administration’s blacklisting of CNOOC made it worse,” the source said.
In its prospectus before the IPO, CNOOC said it could face additional sanctions.
“We cannot predict whether the Company or its subsidiaries and affiliates will be subject to US sanctions in the future as policies change,” CNOOC said.
In the United States, CNOOC owns assets in the onshore Eagle Ford and Rockies shale basins and interests in two major offshore fields in the Gulf of Mexico, Appomattox and Stampede.
The main Canadian oil sands projects are Long Lake and Hangingstone in the province of Alberta.
Reuters Graphics
Reporting by Ron Bousso and Chen Aizhu; Edited by Barbara Lewis