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Chinese CNOOC, the offshore oil and gas producing giant, is getting ready to quit its businesses and assets in the U.S., the UK, and Canada, over concerns that it may come under secondary sanctions over the war in Ukraine, Reuters reported on Wednesday, citing industry sources.
CNOOC has stakes in operating fields in the U.S. Gulf of Mexico, the North Sea, and in Canadian oil sands projects, after it bought Nexen of Canada nearly a decade ago.
CNOOC is estimated to produce around 220,000 barrels of oil equivalent per day (boepd) from assets in the U.S., the UK, and Canada, according to Reuters calculations.
However, according to Reuters sources, the Chinese offshore giant is now preparing to leave the three western markets amid tense China-U.S. relations, especially after the Russian invasion of Ukraine, which China has refused to condemn.
Last week, U.S. Deputy Secretary of State Wendy Sherman told a hearing at the House of Representatives Foreign Affairs Committee that China could become a subject of sanctions if it supports Russia in its war in Ukraine.
“It gives President Xi, I think, a pretty good understanding of what might come his way should he, in fact, support Putin in any material fashion,” Sherman said, as carried by Reuters.
CNOOC plans to exit its North Sea operations, including one of the top producing oilfields in the UK, Buzzard, banking and industry sources told Reuters in March. The Chinese giant has reportedly hired Bank of America to help it with the sale of the North Sea assets, which could fetch as much as $3 billion, the sources said. Preparations for a North Sea exit are part of a new strategic shift for CNOOC, which looks to focus now on Latin American, African, and domestic offshore assets, abandoning businesses in the mature markets, according to the sources who spoke to Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
CNOOC’s move emphasizes the strength of the strategic alliance between China and Russia. It won't be lost on the United States that China is prepared abandon Western markets rather than its closest strategic ally, Russia.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London