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China buys Ecuador fields
China's two largest oil companies will link up to buy assets of EnCana Corp. in Ecuador for $1.42 billion. China Petrochemical Corp. and China National Petroleum Corp. ``are partners in this venture,'' Liu Weijiang, a spokesman at China National Petroleum, said in Beijing today. Oil & Natural Gas Corp.'s bid may have been rejected because EnCana wouldn't agree to a term guaranteeing that Ecuador honor the sale, an official at the Indian company said. Rivalry between China and India over energy resources is increasing as the world's two most populous nations compete for overseas oilfields because demand is outpacing domestic production. China National Petroleum on Aug. 22 agreed to buy Calgary-based PetroKazakhstan Inc. for $4.18 billion, trumping Oil & Natural Gas. ``The fact that Chinese companies are joining hands and bidding shows that they are putting their financial might together to outbid others, including India,'' said Jon Thorn, who manages $180 million at India Capital fund in Hong Kong. ``Chinese companies are bidding more aggressively and proactively after what happened with Unocal.'' U.S. Opposition On Aug. 2, Cnooc Ltd., China's third-biggest oil company, dropped its $18.5 billion bid for Unocal Corp. because of U.S. political opposition. El Segundo, California-based Unocal, would have doubled Cnooc's oil and gas output and raised its reserves 79 percent. EnCana is selling 143 million barrels of proved oil reserves and a 36 percent stake in a pipeline that can transport 450,000 barrels of oil a day. The Ecuador interests yield output of more than 75,000 barrels of oil a day, the Calgary-based company said Sept. 13, identifying the buyer as Andes Petroleum Co. The two Chinese companies are partners in Andes Petroleum, Liu said in a telephone interview. ``We're still waiting for all the regulatory approval,'' he added. ``Oil & Natural Gas's bid was with a guarantee clause from EnCana and probably that was the reason why the bid went to the Chinese,'' spokesman D.K. Dash said by telephone from New Delhi today. The EnCana sale includes 30,000 barrels a day of output in the Amazon jungle that EnCana acquired from Occidental Petroleum Corp. in a stake purchase that was disputed by PetroEcuador. Occidental sold a 40 percent interest in its production contract for Block 15 without government permission and owes Ecuador thousands of dollars related to the transaction, Eduardo Naranjo, a spokesman for state-owned PetroEcuador, said on Sept. 13. Consumption Doubled China's oil consumption has more than doubled in a decade to an estimated 6.65 million barrels a day in 2005, according to the International Energy Agency. The proportion met by imports has risen from zero to about 44 percent. Oil & Natural Gas, India's largest explorer, is seeking to acquire oil and gas assets overseas to meet demand fueled by an economy that's expanded by an average 5.9 percent during the past five years. ONGC Videsh Ltd., a unit of Oil & Natural Gas, with IPR Energy Red Sea Inc. in March won rights to develop a field in Egypt that may hold as much as 600 million barrels of oil. The ONGC unit also won rights to develop a deposit in Qatar that may hold as much as 300 million barrels of oil. It will make an initial investment of $20 million and plans to drill two wells within the next two years, the company had said on March 2. `Bid Aggressively' ``The Indian government should allow ONGC Videsh to bid more aggressively and let them pay what they have to pay for buying assets overseas,'' Thorn said. Prime Minister Manmohan Singh on Jan. 16 said India needs to catch up with neighboring China in securing energy supplies, suggesting competition between the world's two most populous nations for oil and gas fields may intensify. ``We need to strengthen our oil companies in launching them as global firms,'' Singh said at Petrotech 2005, a conference organized by Oil & Natural Gas in New Delhi. ``China is ahead of us in planning for its energy security -- India can no longer be complacent.'' China National Petroleum will partner Cnooc's parent China National Offshore Oil Corp., the nation's biggest offshore explorer, to drill in Kazakhstan, China National Offshore said Sept. 8. The companies will team up with Kazakhstan's state-owned oil producer KazMunaiGaz. The country has estimated oil reserves of at least 13.45 billion metric tons, the Beijing-based company said. China National Petroleum, the nation's largest oil producer, is the parent of Hong Kong-listed PetroChina Co. China Petrochemical is parent of China Petroleum & Chemical Corp., or Sinopec, Asia's largest refiner. PetroChina and its parent raised HK$21.1 billion ($2.72 billion) in a share sale this month, boosting funds available for overseas acquisitions.
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