China prepares its butt, CNOOC, the Chinese energy giant, selling all of its assets in North America

Prevention is better than cure! Beijing will reduce its dependence on the West, as evidenced by the approach of CNOOC, the Chinese oil and gas giant, which will sell all of its stakes in Great Britain, Canada and the United States, Reuters revealed. After threatening sanctions over its support for Russia, which itself has been under a Western embargo since its military invasion of Ukraine, Beijing wants to prevent the confiscation of some of its assets abroad.

China not only refused to condemn the Russian operation, but also intends to maintain good relations with Russia, which is of interest to hydrocarbons and other raw materials in order to ensure its supply.

By acquiring Canadian producer Nexen in 2012 for $15.1 billion, CNOOC, which has the status of a state corporation, has risen among the world’s largest producers of hydrocarbons.

220,000 barrels of oil equivalent per day

Previous Nexen assets — the name disappeared in 2019 to be incorporated into the CNOOC brand — include interests in offshore fields in the North Sea, in shale gas in northeastern British Columbia, in exploration for shale hydrocarbons off the coast of Newfoundland and Labrador or at the Suderglen wind farm in southern Alberta. , Canada. In the United States, CNOOC has assets in the onshore Eagle Ford and Rockies shale basins, as well as interests in two large offshore fields in the Gulf of Mexico, Appomattox and Scramble. Cumulative production was about 220,000 barrels of oil equivalent per day (BOED), according to Reuters calculations. Outside of China, CNOOC is present in about twenty countries.

Reuters had already reported in March that the Chinese giant had authorized Bank of America to prepare for the sale of its North Sea assets, including a stake in one of the largest fields in the basin.

Last October, its withdrawal from the New York Stock Exchange was completed. CNOOC was among the Chinese companies targeted by the Trump administration in 2020 because they were under the control of the Chinese military. It should be listed on the Shanghai Stock Exchange this month, so it can continue to fund itself.

However, CNOOC does not give up on developing internationally. The Chinese major will seek new assets in Latin America and Africa, and will prioritize the development of new offshore projects in Brazil (where it collaborates with Petrobras and Shell), in Guyana (with Exxon and Hess) and in Uganda and Tanzania (with TotalEnergies), according to the sources. Reported by Reuters.

A new configuration for globalization

CNOOC is among the five largest oil companies in the country, along with CNPC, Sinopec, Yang Chang Petroleum and Sinochem Group, with assets held outside the country.

The competition with the United States, which has taken on a new dimension with Western sanctions against Russia, may lead to a new formation of globalization at the diplomatic and commercial levels. This prospect prompts China to secure its vital supplies for its economic development.

Thus, the country is consuming more and more oil. After 13.1 million barrels per day in 2021, 15.7 million barrels per day should burn in 2022 (+9.1%), according to the latest monthly report from the International Energy Agency (IEA). And even if it increases its domestic production (see chart), this remains largely insufficient to cover needs, especially petroleum products.

This is one of the reasons why China, as well as India and other Asian countries, will increase their purchases of Russian oil, especially since it is sold at a discount.

The need to find an outlet to Russia

For now, this volume movement has yet to materialize, as the IEA notes with respect to February and March data. “It remains to be seen whether Asian buyers will be able to absorb the crude oil and Russian petroleum products previously bought by Europe and banned in the US, UK, Canada and Australia. Without full redistribution, Russia may have to stop increasing oil production with potential consequences for Long term global supplyexplains the International Energy Agency, which expects a decline of 1.5 million barrels per day in April and then nearly 3 million barrels per day in May in Russian production.

Indeed, the urgent need to find an outlet for its hydrocarbon imports is imposed, first and foremost, on Russia more than on its Asian customers. China, under pressure from Washington, is learning the first lessons from the Ukraine conflict and beginning to prepare, just in case.