China oil outfit eyes $17bn Unocal bid By Robin Saponar January 8, 2005
Shares in US energy producer Unocal had their biggest gain in almost six years after the Financial Times said China National Offshore Oil Corp (CNOOC), China's third-biggest oil company, could bid more than $US13 billion ($17 billion) for the oil and gas group.
Detailed talks were yet to be held, the UK newspaper reported on its website, citing unnamed people familiar with the matter. State-owned China National, which owns 71 per cent of Hong Kong-traded CNOOC, is also looking at other overseas purchases, according to the report.
CNOOC declined to comment.
"We've not received any information about the issue," said spokesman Liu Junshan.
Asian assets of Unocal, the worst-performing oil and gas company in the S&P 500 index last year, would be attractive to the Chinese and to international oil companies, so there could be a bidding war, said Jason Putman, an analyst at Victory Capital Management in Cleveland, which oversees about $US50 billion in investments.
Advertisement Advertisement"I think Unocal has a lot of potential buyers," said Mr Putman, whose firm owns 6.3 million Unocal shares. "That's one of the reasons we like Unocal."
Shares of California-based Unocal rose $US3.15, or 7.7 per cent, to $US44.34 in New York Stock Exchange composite trading on Thursday, the biggest gain since April 1999. The shares rose 17 per cent last year, about half the 33 per cent gain for the S&P 500 Oil and Gas Exploration and Production index.
Unocal spokesman Barry Lane declined to comment on the report.
Any deal for Unocal would dwarf previous purchases of US companies by Chinese bidders.
Unocal's most valuable assets were its reserves and the long-term gas projects it was developing, many of which were in Asia, Mr Putman said. Unocal's reserves were the equivalent of 1.175 billion barrels of oil at the end of 2003, about half of which were in Asia.
Thailand is Unocal's main gas-producing area outside the US. The company supplies natural gas to generate 30 per cent of Thailand's electricity.
Unocal, which has worked in Indonesia for 35 years, has invested about $US5 billion in projects there such as the West Seno oilfields, a deepwater project off the coast of East Kalimantan that started producing in August 2003.
"The Chinese have been aggressively pushing for reserves wherever in the world they can find them," said George Morgan, who manages the $US5 billion Templeton Growth Fund for Franklin Resources in Nassau, Bahamas. His fund includes shares of BP and Hong Kong-based Hutchison Whampoa.
Oil prices soared last year, touching an all-time high of $US55.67 a barrel in New York, as unexpectedly strong demand from China raised concern that almost all of the world's available oil production capacity was being tapped. Chinese demand jumped 15 per cent last year, according to a report last month from the International Energy Agency in Paris.
"Energy security is the theme of the new century," Mr Morgan said.
Potential buyers of Unocal might also include Royal Dutch/Shell, ChevronTexaco and ConocoPhillips, Mr Putman said.
"All of these majors have a lot of cash right now and don't have anywhere to put it."
In a small but long-awaited step Tuesday, one of China’s largest energy companies entered the oilsands business with CNOOC Ltd. acquiring nearly 17 per cent of private MEG Energy Corp. for $150 million.
By MICHAEL URBANSKI Today staff and The Canadian Press Wednesday April 13, 2005
Fort McMurray Today — In a small but long-awaited step Tuesday, one of China’s largest energy companies entered the oilsands business with CNOOC Ltd. acquiring nearly 17 per cent of private MEG Energy Corp. for $150 million.
Calgary-based MEG has a large land base near Conklin, 150 kilometres southeast of Fort McMurray, with an estimated two billion barrels of recoverable bitumen in place.
Six-year-old MEG intends to start building a pilot project using steam-assisted gravity drainage (SAGD) technology to melt the tar-like bitumen deep underground before pumping the heavy oil to the surface.
Through incremental expansions, the company hopes to be producing 22,000 barrels per day by 2008.
“I am excited with our low cost entry into oilsands, gaining a footstep in this potential area,” Yang Hua, CNOOC’s chief financial officer said in a release from Hong Kong.
“Lower operating costs and higher recoveries resulting from recent advances in technologies have made many similar projects economically viable.”
MEG’s leases are near the Christina Lake SAGD oilsands plant, owned by Calgary-based energy giant EnCana Corp., and Oklahoma-based Devon Energy’s $500 million Jackfish project, currently under construction.
MEG chief financial officer Dale Hohm said Tuesday the company has been busy gathering capital needed to build its project, raising about $250 million in private equity last year alone.
“This financing with CNOOC is just the last in a series of equity financings that have been done over the course of the last two years.”
Hohm said Tuesday’s deal was “just a common share purchase, it is not a working interest in the property.” As such, CNOOC will have one of 10 directors on its board.
“MEG Energy has some very good assets in the Conklin area. We have strong leases, we have a group of management personnel who are very knowledgeable about developing oilsands.
“The item that we needed to complete the development is capital. So we’re very pleased that CNOOC, after evaluating a large number of projects, chose to invest in our company,” Hohm told Today.
It is no secret in the Canadian oilpatch that several large Chinese oil and gas companies have been closely eyeing the heated level of activity in the Alberta oilsands.
“The size of the oilsands resource is enormous. I think the people in Fort McMurray appreciate that, but the rest of the world is just waking up to that fact,” said Hohm.
“This is a huge resource and it requires multi-billion dollars of capital to develop it, and the international markets will need to provide some of that capital so that we can, as Canadians and Albertans, develop this very strategic resource.”
CNOOC Ltd. is publicly traded on the New York and Hong Kong stock exchanges and is a 70 per cent owned subsidiary of CNOOC, China’s largest producer of offshore crude oil and natural gas and one of the largest independent oil and gas exploration and production companies in the world. The company and its subsidiaries operate in offshore oil and natural gas exploration, development, production and sales, with major oil production off the coasts of China and Indonesia and assets in Australia.
It is also partnered with another Canadian oil and gas company Husky Energy in the Wenchang oilfield in the South China Sea. -- murbanski@fortmcmurraytoday.com
US sees oil and Chavez's ambitions as a troublesome mix
By Jim Bencivenga / csmonitor.com April 20, 2005, updated 12:30 p.m.
US Secretary of State Condoleezza Rice may be in Moscow, but she has Caracas on her mind.
Ms. Rice, who arrived in Russia Tuesday for talks with that country's leaders is "concerned" about some arms sales in Latin America, specifically Venezuela, reports Bloomberg News.
The Russian government played down US concerns by countering that any of its proposed arms deals with Venezuela are in line with international agreements and international law.
Prior to Rice's trip, the US State Department issued its own accusations saying that Venezuela's purchase of 100,000 Russian Kalashnikov rifles, Brazilian helicopters and Spanish patrol boats, might find its way into the hands of Colombian "insurgents."
The Bush administration has also accused Venezuela President Hugo Chavez of having a "poor human rights record and of meddling in the internal affairs of neighboring countries," reports Bloomberg.
Venezuela signed a $120 million contract for Russian military helicopters that includes attack, assault and transport aircraft last month. The purchases are the largest for the country's armed forces since Venezuela's President Hugo Chavez took office in 1999....
The arms are intended to beef up security along the Colombian border where kidnappings and armed incursions by Colombian irregulars are common, Venezuela's information ministry said.
Venezuela is also studying the purchase of Russian MIG-29s, the Russian press has reported.
For its part, Venezuela, the "Saudi Arabia of Latin American" maintains a heightened wariness about US foreign policy vis-a-vis its oil reserves, reports India Daily.
Last week, Mr. Chavez celebrated the second anniversary of a failed coup to overthrow his government by swearing in "commanders of a new military reserve" patterned after Fidel Castro's local militias, which Chavez says are "meant to deter aggression against his country," reports the BBC.
Twenty-thousand reservists paraded before Mr Chavez at the main military barracks in Caracas. The new formation, which the president wants to become a two million-strong force in the near future, will be directly under his command. The move comes amid growing tension between Venezuela and the US. Chavez claims the ultimately unsuccessful April 2002 coup was backed by US interests. Believing he will face more such coups, Chavez has expanded his relations with Russia, China, India and Iran, says India Daily. The oil asset of Venezuela makes it vulnerable. But China, India and Russia have interest in the same. [For Chavez] that may make some difference. The BRIC alliance (Brazil, Russia, India and China) will oppose any invasion or external intervention in Venezuela. It will be of interest to see how BRIC will defend its Venezuelan oil interests in case of a similar crisis.
Venezuela currently supplies the United States with over 15% of its oil, making the South American nation its 4th largest supplier, after Saudi Arabia, Canada, and Mexico.
On related energy matters, Houston-based Citgo Petroleum Corp., owned by Venezulea's state oil company, PDVSA, announced plans on Wednesday to sell two of its eight US refineries, reports the Houston Business Journal. [Oil Minister Rafael Ramirez] reiterated previous assertions that Venezuela does not intend to sell all of Citgo's assets, which include about 13,000 service stations in the United States.
Ramirez and Venezuelan President Hugo Chavez have complained that Venezuela's contracts with refineries in the US are unprofitable for Venezuela and constitute a subsidy for the US economy.
They have said the same thing about the country's production contracts with US and multinational oil companies and have warned that all of these operating agreements will have to be rewritten with higher fees paid to Venezuela and with greater control given to PDVSA.
Chavez has said he wants to diversify the client list for Venezuela's oil, and in recent months he has struck a series of energy accords with neighboring countries, as well as China and Spain.
In his weekly live television show, Chavez called on fellow Venezuelans "to follow the example of Don Quixote" reports The CBC. Let us all read Quixote to feed ourselves once again with that spirit of a fighter who went out to undo injustices and fix the world," he said. 'To some extent, we are all followers of Quixote.'
Chavez's remarks came ahead of a planned [one million book] giveaway of the novel. On April 23, free copies of the book will be given away by the Venezuelan government in the country's public squares.
Quixote is the central character in Miguel de Cervantes' Don Quixote, the 17th-century work that is widely regarded as history's first novel.
In the story, a would-be knight, depicted as brain-adled from reading too many chivalric romances, travels the Castillian countryside righting imaginary wrongs. His most famous battle is against imaginary giants which are, in reality, windmills. The knight of the woeful countenance is accompanied by his faithful, more realistic servant, Sancho Panza.
How much the dreamer, or realist, Chavez turns out to be remains an open question.
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