China signs deals with big oil as Xi underscores open trade
Royal Dutch Shell Plc new opportunities to develop offshore fields in partnership with the nation's biggest maritime explorer.
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CNOOC signs production sharing contracts with nine companies
The accords follow Xi's address marking 40 years of reform
Petroleumworld 12 18 2018
China signaled its openness for business with a raft of deals that'll give oil majors including Royal Dutch Shell Plc new opportunities to develop offshore fields in partnership with the nation's biggest maritime explorer.
China National Offshore Oil Corp. said in Beijing on Tuesday that it had inked oil and gas accords with nine firms. The signing ceremony followed President Xi Jinping's address to party cadres marking 40 years of reform and broadly underlining the nation's commitment to global trade.
Xi Jinping in Beijing on Dec. 18
The agreements cover 64,000 square meters in the Pearl River basin, to a depth of up to 3,000 meters. In addition to the Netherlands-based Shell, France's Total SA and U.S.-based Chevron Corp. were also awarded parcels. All three majors hold existing production sharing contracts with CNOOC. The other firms involved are: ConocoPhillips, Equinor ASA, Husky Energy Inc., Kuwait Foreign Petroleum Exploration Co., Roc Oil Co., and SK Innovation Co.
“It's no coincidence that CNOOC made the statement a couple of hours after President Xi's speech,” said Tian Miao, a Beijing-based analyst at Everbright Sun Hung Kai Co. “It's only reasonable to assume this of one of the real actions China is taking to show the world it's willing to open businesses to the whole world.”
CNOOC has signed more than 200 PSCs since its inception in the early 1980's, even as it has increasingly relied on its own resources to tap deep-water projects in Chinese waters -- most recently the giant Lingshui 17-2 gas field in the South China Sea. CNOOC has promised to increase spending and raise output, heeding Xi's call for enhanced energy security as imports grow and the nation contends with the U.S. over trade.
“The agreements will facilitate the establishment of a long term and stable cooperation and share the development opportunities to a certain extent in the Strategic Cooperation Areas, creating conditions for the final signing of contracts,” CNOOC's listed unit said in a statement.
The smallest of China's big three oil and gas firms, CNOOC is its favored vehicle for international cooperation and holds the vast majority of reserves in Chinese waters. About three-quarters of its offshore production is conducted independently, with the remainder tied up in PSCs, including deals signed in July with Australia's Roc Oil and Smart Oil LLC of the U.S.
“From a business perspective, inviting international oil companies to join domestic offshore exploration helps reduce investment risks and bring in more offshore drilling expertise,” said Tian. “It definitely helps CNOOC's promise to quickly raise oil and gas output from domestic fields.”
Click here to read more on China's commitment to opening up
Xi's earlier address in the capital disappointed those hoping for specific policies to counter a slowing economy and show the nation's intent to free up its markets. Instead, the president focused more on the accomplishments of the nation's Communist Party.
— With assistance by Aibing Guo, and Dong Lyu
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