China's Oil Hunger Hits $15 Billion in Canada Amid U.S. Diet Deals
According to Bloomberg data, Chinese oil giants are the second-largest acquirer of oil assets, behind U.S. oil majors, cutting $35.6 billion of acquisitions last year. Notable Chinese deals include Sinopec's November acquisition of a 30% stake in Portuguese energy company Galp Energia's Brazilian subsidiary Petrogal Brasil, for over $5 billion, and a separate October acquisition of Daylight Energy, which holds 300,000 acres of shale oil and gas drilling assets, for $2.1 billion.
The interest in Canadian assets from Chinese state-run oil companies has been building. Last year, Petrochina signed a deal with Encana to buy assets in the Cutback region for $5 billion, a deal which would have been the largest-ever oil and gas acquisition in Canada by a Chinese company. That deal fell apart for undisclosed reasons.
CNOOC's bid for Nexen may still be worth watching for U.S. investors and energy players. Benchmark analyst Mark Gilman said in November that Chinese M&A interest in North America is at least partially about acquiring the technological expertise required from complicated deepwater and shale drilling. The same could be said of ExxonMobil's acquisition of XTO Energy, seen as not only an asset play but a shale drilling expertise and technology acquisition.
Gilman noted the key to deals will be the size of new shale finds and the emergence of new types of drilling methods like fracking. "You have to keep half an eye on the frequency on which new plays are emerging...
Sinopec's acquisition of a stake in Petrogal Brasil includes access to the Jupiter and Tupi offshore oil fields -- the largest oil finds in the western hemisphere since the 1970s. The push into what is known as the Brazilian pre-salt, adds to a legacy of Chinese oil ventures with established players in hard to drill areas.
More recently, Sinopec bought a 33% interest in five shale ventures owned by Devon Energy for $2.2 billion, giving it access and a drilling partner in prized shale assets like the Tuscaloosa Marine , Niobrara, Mississippian, Ohio Utica and the Michigan Basin shale formations.