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EXCLUSIVE: China’s oil champ prepares for Western withdrawal due to fear of sanctions

EXCLUSIVE: China's oil champ prepares for Western withdrawal due to fear of sanctions

Men wearing face masks walk in front of a sign for China National Offshore Oil Corp (CNOOC) outside its headquarters in Beijing, China, March 8, 2021. REUTERS/Tingshu Wang

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  • CNOOC preparing to exit Britain, Canada and the United States
  • Beijing worried about rising tension with the West
  • Production in three countries was 220,000 barrels of oil equivalent last year
  • The decision comes after the delisting of CNOOC from the New York Stock Exchange

LONDON/SINGAPORE (Reuters) – China’s largest offshore oil and gas producer CNOOC Ltd. (0883.HK) Industry sources said the company was preparing to exit operations in Britain, Canada and the United States, due to concerns in Beijing that the assets could be subject to Western sanctions.

Relations between China and the West have long been strained over trade and human rights issues, and tensions escalated after Russia’s invasion of Ukraine, which China refused to condemn.

The United States said last week that China could face consequences if it helped Russia evade Western sanctions, which have included financial measures that restrict Russia’s access to foreign currency and complicate the processing of international payments. Read more

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CNOOC did not immediately comment.

Companies conduct periodic reviews of their investment portfolios, but the exit that is being prepared will happen less than a decade after state-owned CNOOC entered the three countries with its $15 billion acquisition of Canada’s Nexen, a deal that turned the Chinese champion into a global leader. Producer.

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Reuters calculations found that the assets, which include stakes in major fields in the North Sea and Gulf of Mexico and large Canadian oil sands projects, produce about 220,000 barrels of oil equivalent per day (boed).

Last month, Reuters reported that CNOOC has hired Bank of America to prepare for the sale of its North Sea assets, which include a stake in one of the basin’s largest fields. Read more

The sources said that CNOOC launched a global review of the portfolio ahead of its planned public listing on the Shanghai Stock Exchange later this month, primarily aimed at obtaining alternative funding after its US shares were delisted last October. Read more

The delisting was part of a move by the administration of former US President Donald Trump in 2020 that targeted several Chinese companies that Washington said were owned or controlled by the Chinese military. China condemned the move.

CNOOC is also benefiting from rising oil and gas prices, spurred by Russia’s invasion of Ukraine on February 24, and hopes to attract buyers as Western countries seek to develop domestic production to replace Russian energy.

As it seeks to leave the West, CNOOC is looking to acquire new assets in Latin America and Africa, and also wants to prioritize the development of large and new prospects in Brazil, Guyana and Uganda, the sources said.


A senior industry source told Reuters that CNOOC is seeking to sell “marginal and difficult to manage” assets in Britain, Canada and the United States.

All sources spoke on condition of anonymity due to the sensitivity of the topic.

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An industry source said last month that CNOOC’s senior management, including Chairman Wang Dongjin, found managing former Nexen assets “uncomfortable” due to red tape and higher operating costs compared to developing countries.

The source added that CNOOC has faced obstacles operating in the United States in particular, such as the security clearances Washington requires for its Chinese executives to enter the country.

“Assets like the deep waters of the Gulf of Mexico are technically challenging and CNOOC really needs to work with partners to learn, but the company’s executives have not even been allowed to visit US offices. It has been a pain all these years and the Trump administration’s blacklisting of CNOOC only made it worse,” the source said. blemish.”

In its prospectus ahead of the initial public offering, CNOOC said it could face additional penalties.

“We cannot speculate whether the company or its subsidiaries and partners will be affected by US sanctions in the future, if policies change,” CNOOC said.

In the United States, CNOOC has assets in the Eagle Ford and Rockies shale basins as well as stakes in two large offshore fields in the Gulf of Mexico, Appomattox and Stampede.

Its major Canadian assets are the Long Lake and Hangingstone oil sands projects in the province of Alberta.

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(Report) Submitted by Ron Bosso and Chen Aicho; Editing by Barbara Lewis

Our criteria: Thomson Reuters Trust Principles.