(EnergyAsia, October 28 2013, Monday) — The jury is still out on the wisdom of Chinese state-owned companies’ push into Canada’s oil sector with CNOOC Ltd responding to its critics with a surge in third quarter production and sales revenue while Sinopec is reportedly looking to reduce its presence to focus on profitability.
Both companies, among the two largest Chinese state-owned energy firms, have come under criticism for spending heavily to acquire assets abroad amid a crackdown on corruption and waste back home by President Xi Jinping’s governmentwhich came to power this year.
CNOOC Ltd’s sales revenues surged 15.9% to 56.1 billion yuan over the same period last year while its oil-equivalent production rose 17.8% to 103.4 million b/d, boosted by the inclusion of Nexen Inc, the Calgary-based subsidiary that it acquired in February. (US$1=6.10 yuan).
Excluding Nexen’s contribution, CNOOC Ltd said its net production for July-September quarter was slightly down from the same period last year.
Despite affirming its production target of 338 to 348 million barrels of oil equivalent for this year, China’s largest offshore producer has seen its share price underperform the Hong Kong Stock Index.
CNOOC Ltd, which does not report its net quarterly profit, has been criticised by shareholders, company insiders, Chinese officials for allegedly overpaying in its US$15.1 billion acquisition of Nexen Inc.
The deal also attracted widespread opposition from Canadians including Cabinet ministers who fear the Chinese government would be exercising indirect but complete control over one of their country’s better known oil and gas company.
Prime Minister Stephen Harper weathered a significant political storm in approving the deal, but succeeded in squeezing further concessions from CNOOC Ltd and raising the cost of the deal.
Ironically, his government’s concern now is that Chinese state companies may give Canada the miss as they shift attention to Central Asia, Russia and Brazil.
In a move that has surprised the Canadian oilpatch, a Sinopec executive told Reuters that the company is looking to sell half of its two biggest shale assets in western Canada’s Montney and Duvernay areas.
The decision could be of concern to Canada if Chinese firms, which have spent tens of billions of dollars acquiring oil and gas assets in North America, shift their focus to raising profitability instead of making further investment.