A move by two Chinese oil firms into the UK North Sea could herald China’s entry on to the global oil industry stage, according to an energy security analyst.
As well as increasing security of supply for its growing thirst for energy, a move into the region would give the country’s oil firms higher profile and greater credibility, said Janet Xuanli Liao, a lecturer in international relations and energy security at Dundee University.
Until now, she said state-owned oil firms from the country had been limited to risky or third world and developing countries in which to invest in oil and gas production.
Other than partnerships in Canada, the only joint venture with a western company is with BP in Iraq, on the Rumaila oil field, said Ms Liao.
“I think this may be a path to prove themselves,” she said. “If they can come to the North Sea without causing much concern, maybe in the next 10 years it will be easier for them to deal with western companies or states.
“At the moment, anywhere Chinese companies go they face problems.”
The deals announced on Monday, if agreed, would see the Chinese gaining access to the North Sea via its already-known partner – Canada.
CNOOC has offered to pay a 61% premium of £9.6billion to buy Nexen, whose interests include the Buzzard oil field – the largest-producing North Sea field.
Sinopec has offered to pay £956million for a 49% share of Talisman’s UK business. Both deals together would amount to about 10% of the UK North Sea’s production.
Although China could just buy its high demand for oil and gas on the market, instead of building its own international exploration and production firms, the country’s psyche means it wants control over its supply, said Ms Liao.
“The government and nation’s mindset is that, if you always have to rely on foreign supply, it is dependent on them being willing to supply it to you – or not.
“From 1949 to the 1970s, China faced sanctions from the western world. Other than the Soviet Union, no one would sell to China. The EU still has sanctions on selling weapons to China. So there is still a belief you need to have control of supply.”
But Ms Liao thinks it is not just the oil and gas the state-owned firms are after.
Ms Liao said: “I think the companies are keen to deal with western energy projects or assets more than before because they can learn something about international business management and corporate governance for which they are criticised often.
“Also they can avoid going to only controversial places.”
Recommended for you
