March 8, 2012
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06.03.2012

Chinese Oil Firms Face Uncertainty With Overseas Growth Plans

The expansion blueprints of Chinese oil companies overseas are currently facing "unprecedented challenges", which means that the State-owned enterprise giants should prepare for the unexpected, according to a former executive of China National Petroleum Corp.

Both geopolitical and economic risks have surged recently, a situation China has not encountered in recent decades, and have slowed the oil companies' pace of expansion overseas, said Chen Geng, a deputy of the National People's Congress (NPC) and the former general manager of CNPC.

"It is now a good time to launch mergers and acquisitions overseas, because the rising oil price is lifting the market value of public companies, adding to costs and potential risks," said Chen.

In 2011, the total mergers and acquisition value of China's three biggest oil companies CNPC, China Petrochemical Corp and China National Offshore Oil Corp, reached about $20 billion, the second highest level in the country's history, following on from 2010, according to a report from CNPC's Economics and Technology Research Institute.

The overseas journey of China's oil companies started in 1993. Those 18 years of overseas experience has played an important role in establishing the energy security system, said Chen.

Copyright 2012, China Daily. All rights reserved.

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