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China: Getting Into the Oil Action

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Not long ago, the world of international oil and gas was dominated by a handful of major companies headquartered in the U.S. and Europe. Lately, however, global players have emerged, and players in countries such as Russia, China, Brazil, and India are getting a piece of the action.

The latest example of this increasing influence from the latter group of countries comes through a report issued by The Wall Street Journal that China's Cnooc (NYSE: CEO  ) and China Petrochemical Corp. may be teaming up to spend about $1.8 billion for a stake in an oil field offshore Angola. The stake, which is owned by Marathon Oil (NYSE: MRO  ) , would give the two companies about a 20% interest in deepwater Block 32, which has already yielded 11 successful wells.

The block is operated by France's Total (NYSE: TOT  ) , with other interests owned by Sonangol, the state-owned Angolan oil company, and ExxonMobil (NYSE: XOM  ) . It appears that Brazil's Petrobras (NYSE: PBR  ) and a unit of India's Oil & Natural Gas also made unsuccessful bids for the available assets.

Beyond the Angolan play, Cnooc also is said to be considering a Western Hemisphere move through the purchase of natural gas interests in Trinidad and Tobago that are currently owned by Calgary's Talisman Energy. The price tag on the gas assets apparently would fall in the $300 million to $700 million range.

With or without these pending acquisitions, Chinese natural resources companies have ratcheted up their global activities substantially. For instance, early in 2008, Aluminum Corp. of China (NYSE: ACH  ) -- Chinalco to its friends -- acquired a stake in Anglo-Australian mining giant Rio Tinto (NYSE: RTP  ) . That stake may now be in the process of being expanded.

For my money, there's a very simple, but vital, lesson in all this activity: The world of natural resources -- including both energy and mining -- is almost by the day becoming more global and more significant to developed and developing nations alike. It’s no wonder, then, that the Global Gains team recently added CNOOC to its list of recommendations.

For related Foolishness:

Total is a Motley Fool Income Investor selection. CNOOC is a Global Gains selection. Why not treat yourself to an absolutely free 30-day test drive of either newsletter?

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does welcome your questions, comments, or criticisms. The Fool has a globally-recognized disclosure policy.


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David Smith
Idahovol

A longtime securities analyst and multiple-term member of The Wall Street Journal's All-Star Research team, Dave specializes in energy and natural resources.

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Related Tickers

6/30/2015 4:04 PM
ACH $12.45 Up +0.12 +0.97%
Aluminum Corp. of… CAPS Rating: **
CEO $141.92 Up +1.77 +1.26%
CNOOC, Ltd. CAPS Rating: **
MRO $26.54 Down -0.15 -0.56%
Marathon Oil Corp CAPS Rating: ****
PBR $9.05 Up +0.02 +0.22%
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RTP.DL $0.00 Down +0.00 +0.00%
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Total (ADR) CAPS Rating: ****
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