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Monday, March 27, 2023

Chinese Energy Major CNOOC Set to Exit West

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China’s state-owned oil and gas corporation China National Offshore Oil Corporation (CNOOC) is reportedly preparing to exit from the US, UK and Canada due to mounting concerns about sanctions, regulations and rising costs.

Relations between China and Western countries have soured over the past several years. Beijing’s ties with Washington were shattered after former US President Donald Trump launched a large-scale trade war, hitting a wide range of Chinese goods with import levies.

Tensions have been mounting recently after China refused to condemn Russia’s military operation in Ukraine.

CNOOC, China’s top offshore oil and gas producer, is currently seeking to leave the West by selling “marginal and hard to manage” assets in the three nations, according to unnamed industry sources quoted by Reuters.

The sources, who spoke on condition of anonymity because of the sensitivity of the issue, told the agency that the company’s top management found it “uncomfortable” to manage its Western assets because of regulations and high operating costs.

CNOOC, which entered the three countries by a $15 billion acquisition of Canadian energy major Nexen in 2013, was delisted from the New York Stock Exchange after Trump’s anti-China campaign was launched. Prior to that the company had been listed on the NYSE for two decades. Joe Biden’s administration removed the firm from the blacklist about a year ago.

In the US, the Chinese energy major owns onshore assets in the Eagle Ford and Niobrara shale basins and also has offshore stakes in the Stampede and Appomattox fields in the Gulf of Mexico. In Britain, the company operates three sites in northeast Scotland, and has oil sands and shale gas assets in Canada.

“Assets like Gulf of Mexico Deepwater are technologically challenging and CNOOC really needed to work with partners to learn, but company executives were not even allowed to visit the US offices,” a senior industry source said, as quoted by media.

“It had been a pain all along these years and the Trump administration’s blacklisting of CNOOC made it worse,” he explained.

Moreover, the latest sanctions imposed by the US on Russia may hit CNOOC’s assets, the sources also said. The company, which is getting ready to list on the Shanghai stock exchange in April, is reportedly planning to purchase assets in Latin America and Africa.

CNOOC reportedly produced some 1.57 million barrels of oil equivalent per day in 2021, of which 62,000 were from sites in Canada and 80,000 were from sites elsewhere in North America. Altogether, its assets in the US, UK and Canada produce nearly 220,000 barrels of oil equivalent per day, according to Reuters’ calculations.

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