Chinese Companies Plan to Buy Stakes in Foreign-Owned Oil Companies
State controlled CNOOC the world’s third largest oil company, recently launched its largest foreign takeover bid by agreeing to buy Canadian oil producer Nexen Inc. for US$ 15 billion. CNOOC hopes to sell the bid to shareholders and with the government for a 61% premium on Nexen’s stock price. CNOOC also plans to retain all Nexen employees and make Canada its home base for its Western Hemisphere operations. Nexen Inc. has oil sands operations in the Canadian province of Alberta, extensive exploration and production holdings in the North Sea, and shale gas in the province of British Columbia.
CNOOC is offering its shareholders US$27.50 cash per share for Nexen, in which experts are saying is a move and the most ambitious foray by resource-hungry China into North American energy since the county’s attempt to purchase U.S.-based Unocal for US$18.5 billion in 2005 that was thwarted by a political backlash. This move was also followed by Sinopec Corp. agreeing to purchase a 49 percent stake in Talisman’s North Sea operations for US$ 1.5 billion.
Talisman, Canada’s No. 6 oil and gas exploration company is forming a joint venture with Sinopec for its operations that will produce 63,000 barrels of oil a day. The deals is still subject for review by Canada’s Industry Ministry to ensure that the takeover will have a net benefit for Canada.