According to Reuters, CNOOC Ltd., China’s top offshore oil and gas producer, is preparing to pull its operations out of Britain, Canada, and the United States. The oil giant is fearful that assets in those countries could become subject to Western sanctions, an industry source said.
The West and China have maintained a tumultuous relationship for quite some time due to disagreements regarding trade and human rights. Since Russia invaded Ukraine, that strain has intensified as China refuses to condemn Putin’s actions.
Last week, the U.S. warned China that it would face consequences if it helped Russia navigate the sanctions the West and Europe have implemented.
CNOOC acquired Canada’s Nexen through a $15 billion buyout. This deal solidified CNOOC’s place as a leading global oil and gas producer. CNOOC spent less than a decade in the countries it is now looking to withdraw from.
Reuters calculated how much oil CNOOC currently produces in the three countries and found that, between the North Sea, the Gulf of Mexico, and large Canadian oil sand projects, the company produces about 220,000 barrels of oil per day.
In March, CNOOC recruited the help of Bank of America to oversee the sale of its North Sea assets, including the company’s stake in one of the largest oil fields in the basin.
According to Reuters, the Trump administration blacklisted CNOOC, which planned to sell 2.6 billion shares on April 12.
The oil giant said it “would use the share sale proceeds to fund one gas and seven oilfield projects in China and overseas, and to replenish capital.”
According to Reuters, China is looking to Latin America and Africa to compensate for the North American and British losses. China is specifically looking toward prospects in Brazil, Guyana, and Uganda.
Industry sources, who wished to remain anonymous due to the issue’s sensitivity, said, “CNOOC’s top management, including chairman Wang Dongjin, found managing the former Nexen assets was ‘uncomfortable’ because of red tape and high operating costs compared with developing nations.”
The source stated that offices in the United States were challenging to maintain because Chinese executives could not visit U.S. offices due to the trouble of obtaining security clearances.
In the United States, CNOOC owns assets in the onshore Eagle Ford and Rockies shale basins. It also has a significant stake in two large offshore fields in the Gulf of Mexico — Appomattox and Stampede.