• 4 minutes Ten Years of Plunging Solar Prices
  • 7 minutes Hydrogen Capable Natural Gas Turbines
  • 10 minutes World looks on in horror as Trump flails over pandemic despite claims US leads way
  • 13 minutes Large gas belt discovered in China
  • 2 hours Would bashing China solve all the problems of the United States
  • 30 mins Yale University Epidemiologist Publishes Paper on Major Benefits of Hydroxchloroquine for High-risk Outpatients. Quacksalvers like Fauci should put lives ahead of Politics
  • 23 mins Model 3 cheaper to buy than BMW 3 series.
  • 8 mins Thugs in Trumpistan
  • 4 hours Pompeo's Hong Kong
  • 1 day China to Impose Dictatorship on Hong Kong
  • 15 hours COVID 19 May Be Less Deadly Than Flu Study Finds
  • 9 mins China To Boost Oil & Gas Exploration, As EU Prepares To Commit Suicide
  • 9 hours China’s Oil Thirst Draws an Armada of Tankers
  • 4 hours Income report showing potential future spending and economic growth
  • 2 days Iran's first oil tanker has arrived near Venezuela
  • 5 hours US-China tech competition accelerates: on Friday 05/15 new sanctions on Huawei, on Monday 05/18 Samsung chief visits China
  • 6 hours The CDC confirms remarkably low coronavirus death rate. Where is the media?
  • 1 day 60 mph electric mopeds
  • 2 days Let’s Try This....
U.S. LNG Investment Suffers As Demand Dwindles

U.S. LNG Investment Suffers As Demand Dwindles

Weak demand is sparking a…

2 Hot Hydrogen Stocks Right Now

2 Hot Hydrogen Stocks Right Now

Despite all the hype around…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

The Chinese Giant Taking Over Energy Markets

Last week’s announcement of the US$9-billion acquisition by Chinese CEFC of a more than 14-percent stake in Rosneft sent ripples across the oil industry and among commodity traders.

The Chinese conglomerate, which started as a small oil trader, bought the stake from none other than Glencore, which acquired it at the end of last year in tandem with the Qatar Investment Authority.

The deal, besides making Glencore’s lenders breathe a deep sigh of relief, considerably expanded the access of the Chinese company to Russian oil. And it’s not the last buy in Russia, it seems. Just a week after the Rosneft buy, Reuters reported that CEFC is preparing to take part in the initial public offering of En+, a metals and power company controlled by billionaire Oleg Deripaska, which focuses on aluminum and hydropower. According to unnamed sources, the Chinese company sought ways to increase its exposure to the Russian natural resources sector.

Earlier deals include the US$899-milion buy of Emirati ADCO (Abu Dhabi Company for Onshore Petroleum Operations Ltd.) earlier this year; a US$110 million purchase of oil and gas blocks in Chad, completed last year; the US$138-million acquisition of China Natural Gas Corp. and the US$311-million purchase of local Anhui Huaxing Petrochemical Co, both sealed in 2015. Also in 2015, CEFC bought KMG International, a Romania-based venture of local Rompetrol and Kazakhstan’s state oil major Kazmunaygaz for US$680 million.

CEFC has also bought some financial services companies over the years, but it seems to have a clear focus on natural resources—primarily oil and gas. Related: Oil Price Volatility Is Set To Return

Many industry observers wonder where the money for these acquisitions is coming from. Bloomberg’s Aibing Guo and Helena Bedwell, in an extensive analysis, suggest that Beijing is providing CEFC with heavy support, possibly even financial.

Oil and metals are a priority investment area under the Belt and Road global expansion program, so it’s no wonder CEFC is being encouraged to buy more assets in these industries. Belt and Road aside, Chinese producers are all looking abroad for new oil production as local fields creep nearer to depletion and production costs rise.

In this shopping spree context, the question of whether CEFC could be among the prospective buyers of Saudi Aramco is particularly fascinating. Chinese companies aren’t, as a rule, known for their willingness to pay huge premiums on their acquisition targets’ price. But a hefty premium is what Riyadh will look for in the upcoming IPO of its state oil giant, given the discrepancy between the internal valuation of Aramco, which is about US$2 trillion, and external valuations, some of which peg the value of the company at below US$1 trillion.

Traditionally, state oil majors such as CNPC and Sinopec have been the ones in charge of China’s global commodity expansion, but judging by CEFC’s latest moves that are obviously being made with Beijing’s blessing, it’s not unthinkable to see it in the future as a potential challenger for the big oil traders, whether that be in the Aramco IPO or in other lucrative deals.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News