China National Petroleum Corp in $17 Billion Argentina Oil Bid

Posted by: Dexter Roberts on July 3, 2009

More news out showing China is serious about picking up overseas assets to meet its surging energy and resource needs. This time, a report published yesterday in the Hong Kong-based South China Morning Post, says that China National Petroleum Corp, China’s largest oil and gas company, wants to resurrect its bid to take a $17 billion stake in Argentina’s YPF, majority-owned by Spain’s Repsol.

It’s no surprise that China is moving increasingly aggressively to pick up overseas resources, including in oil and gas of course. It’s still fast-growing economy already relies on energy imports for more than one-half its overall demand, and that figure is certain to get even larger. And China is interested in spending its $2 trillion in foreign exchange reserves on something other than just U.S. Treasuries. Hard assets, particularly much-needed resources, are one very good alternative and very much in favor from the government’s perspective too. That has driven a flurry of oil and gas deals including one by China’s second largest petro company Sinopec, which plans to spend $7.2 billion to purchase Addax Petroleum, giving it access to assets in Nigeria and the Kurdish region of Iraq. CNCP too has recently made other big investments overseas including in Kazakhstan and in Singapore, and on June 30 won a joint bid with BP to acquire Iraqi oil assets. The company reportedly is also looking at possible deals in Mongolia.

A successful bid in Argentina is certainly not guaranteed, however—a point the SCMP article also highlighted. Indeed, CNPC has made two previous bids for the company, both of which failed. And protectionism directed at a cash-rich China seems to be growing, including in places like Argentina—but also far afield in Australia. Case in point: China Aluminum Corp’s recent $19.5 billion failed bid to take a stake of Australia’s Rio Tinto. And of course there is the example of CNOOC’s stymied attempt to take over Unocal in the US several years ago, a fiasco which still raises ire in Beijing.

Reader Comments

DanTe

July 3, 2009 4:29 PM

It would be funny to see what happens when the latinos starts to nationalize the oil again as they're prone to do from time to time. The libtards in the U.S. prevents U.S. troops from being sent in to prevent the theft of property. But the Chinese will have no such yoke around their military. The Chinese should definitely buy some Venezuelan oil interests to >:)

Ben Gee

July 4, 2009 5:18 AM

If a foreign company act in a selfish way with no regard to the host country's interest, then, the host country has no choice but to nationalize it. If the company worked for the interest of the host country, the host country will be happy to have it. Up till now, all Chinese companies wanted to work with their foreign hosts to make sure the benefits are shared properly to create win-win situations. Most host countries are happy to have them around.

jonathan

July 5, 2009 1:54 AM

bad news for your country.

haharsam

July 5, 2009 2:38 PM

right on dante .... Bushes sending military to Iraq and Kuwait had done so much good for the country. We should use our mility to take all the oil from the world. Let's get it from Russia first.

halfx

July 5, 2009 3:00 PM


dante, Bush-es sending military to Kuwait and Irag did so much good for securing oil from middle east, we should use military to get all the oil from the world. Let's get it from Russia first. Your comment shows you haven't graduated from HS. Get some edu first before going off on military.

Henry L.

July 6, 2009 8:01 AM

Dante. I am keeping an eye on you on and the comments you've posted everywhere in BW. Your typical viewpoint is..."me good, you bad....bash-bash"

Mark-Anthony

July 6, 2009 11:53 AM

Ben Gee ..... I'm confused here, isn't that process of a win-win situation called a contract? If a host country doesn't like what the companies offer then reject the bid. I see nationalization(to clarify when a country doesnt pay FMV for the assets) as a reflection on the people of the host country, it shows a la ck of integrity and pure ignorance. Trust me, Exxon going to punish Venezuela in the future .... and I cant wait to see it. I am sick of this attitude that corporation owe people something beyond what is contractually negotiated, they made deals when oil was low and now dont like them when oil is high. They are seeing the effect of it now, oil has drop and they have mismanaged PDVSA to the point where they aren't going to be able to pump enough to pay its bills.

Daniel

July 14, 2009 6:36 PM

What if Chinese buyout companies and pay with their US Treasuries and then US Treasuries become junk? Sellers would end up having neither the companies nor money-value assets, right?

JC

July 21, 2009 11:01 AM

China Aluminum Corp’s bid failed on grounds of shareholder value for Rio - not protectionism. The foreign investment board never got a chance to announce its decision as to whether China's capital injection would be approved by the government.

That said - it certainly did come up against some political opposition. However, although the opposition to China's bid had a definite protectionist flavour, it was mainly just political brinksmanship.

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