Exclusive – China’s oil champion prepares Western retreat over sanctions fear

By Ron Bousso and Chen Aizhu

LONDON/SINGAPORE (Reuters) – China’s high offshore oil and fuel producer CNOOC Ltd. is getting ready to exit its operations in Britain, Canada and america, due to issues in Beijing the property may turn out to be topic to Western sanctions, trade sources mentioned.

Ties between China and the West have lengthy been strained by commerce and human rights points and the stress has grown following Russia’s invasion of Ukraine, which China has refused to sentence.

America mentioned final week China may face penalties if it helped Russia to evade Western sanctions which have included monetary measures that limit Russia’s entry to overseas forex and make it difficult to course of worldwide funds.

CNOOC didn’t instantly remark.

Firms periodically perform evaluations of their portfolios, however the exit being ready would happen lower than a decade after state-owned CNOOC entered the three nations through a $15 billion acquisition of Canada’s Nexen, a deal that reworked the Chinese language champion into a number one world producer.

The property, which embody stakes in main fields within the North Sea, the Gulf of Mexico and huge Canadian oil sand tasks, produce round 220,000 barrels of oil equal per day (boed), Reuters calculations discovered.

Final month, Reuters reported CNOOC had employed Financial institution of America to arrange for the sale of its North Sea property, which embody a stake in one of many basin’s largest fields.

CNOOC has launched a worldwide portfolio overview forward of its deliberate public itemizing within the Shanghai inventory alternate later this month that’s aimed primarily at tapping different funding following the delisting of its U.S. shares final October, the sources mentioned.

The delisting was a part of a transfer by former U.S. President Donald Trump’s administration in 2020 that focused a number of Chinese language corporations Washington mentioned have been owned or managed by the Chinese language army. China condemned the transfer.

CNOOC can also be benefiting from a rally in oil and fuel costs, pushed by Russia’s invasion of Ukraine on Feb. 24, and hopes to draw patrons as Western nations search to develop home manufacturing to substitute Russian vitality.

Because it seeks to go away the West, CNOOC is trying to purchase new property in Latin America and Africa, and likewise desires to prioritise the event of huge, new prospects in Brazil, Guyana and Uganda, the sources mentioned.

‘A PAIN’

CNOOC is searching for to promote “marginal and exhausting to handle” property in Britain, Canada and america, a senior trade supply informed Reuters.

All of the sources spoke on situation of anonymity due to the sensitivity of the difficulty.

The trade supply mentioned final month that CNOOC’s high administration, together with chairman Wang Dongjin, discovered managing the previous Nexen property was “uncomfortable” due to purple tape and excessive working prices in contrast with growing nations.

CNOOC has confronted hurdles working in america particularly, similar to safety clearances required by Washington for its Chinese language executives to enter the nation, the supply added.  

“Property like Gulf of Mexico deepwater are technologically difficult and CNOOC actually wanted to work with companions to study, however firm executives weren’t even allowed to go to the U.S. places of work. It had been a ache all alongside these years and the Trump administration’s blacklisting of CNOOC made it worse,” mentioned the supply.

In its prospectus forward of the preliminary public providing, CNOOC mentioned it may face further sanctions.

“We can’t predict if the corporate or its associates and companions shall be affected by U.S. sanctions in future, if insurance policies change,” CNOOC mentioned.

In america, CNOOC owns property within the onshore Eagle Ford and Rockies shale basins in addition to stakes in two giant offshore fields within the Gulf of Mexico, Appomattox and Stampede.

Its fundamental Canadian property oil sands tasks are Lengthy Lake and Hangingstone in Alberta Province.

(Reporting by Ron Bousso and Chen Aizhu; modifying by Barbara Lewis)