China turns to the Americas for oil investment deals

China has added the Americas on its list of chief destinations while shopping for oil assets.  It is in for a shopping spree, looking for productive oil properties in the booming American region.

Experts say that this insatiable appetite could be a boon for American consumers as China’s pursuit of oil assets may trigger growth in energy production, along with declining prices on a global scale.

China’s oil asset acquisitions in the area have been apparent for the last two years.  In 2010, the country’s CNOOC invested $2 billion in a Texan oil field owned by Chesapeake.  After a year, the same oil firm purchased OPTI Canada, an oil sands operator, also for a sum of $2 billion.

Other oil-related ventures in 2011 included China National Petroleum Corporation’s joint venture partnership with Canada’s Encana, to whom it paid more than $5 billion in exchange for interest in shale gas assets. Sinopec also shelled out $7 billion to acquire a stake in Brazil’s oil assets.

More recently, PetroChina was reportedly eyeing Valero’s oil refinery in Aruba. Valero is a large U.S. refinery listed in Fortune’s Top 500. Apart from oil plant acquisitions, it is also planning to invest in oil pipelines with line capacities of up to 300,000 bpd.  It intends to carry oil from Colombia to the Pacific region.

The country’s oil requirement is already within the 10 million bpd level and, according to forecasts, this demand could grow by 50 percent in less than 10 years. This alone is reason enough to go on a shopping spree in regions where oil supply is relatively steady.

Similar to the U.S., half of China’s oil requirement is sourced internationally, although America’s reliance on imported oil is already on a decline, partly due to new oil and gas finds within its territory.

China’s growing oil stakes in the Western Hemisphere did not fail to elicit doubts on China’s true intentions, but experts comment that an increase in world oil supply would most likely cut the price of oil and this will benefit the entire global market.

Asia Pacific Energy Consulting Head, Al Troner emphasized that China’s attempts at investing in oil assets are not solely for addressing domestic supply concerns. It seeks to collaborate with the Americas to help reach its goal of becoming a leading global oil supplier.

Troner added “This is not some insidious 1960s plot to destroy the Untied Sates. If they can increase supply as well as demand, then what’s the loss for anyone.”

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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