Rio Tinto names Shell’s Katie Jackson as new copper chief
Jackson, who is the current president of National Grid Ventures, an energy group, joins Rio Tinto on September 1.
China’s state owned oil company – China National Offshore Oil Corp or CNOOC – has said it will take radical actions to raise the funds it needs to go ahead with the intended $15.1 billion takeover of Canadian oil sands player Nexen (TSX & NYSE:NXY).
The announcement of cutting 40% of dividends was made in the wake of the Chinese oil giant’s disappointing first-half profits, coinciding with the publication of the company’s first half-year results.
Net profit for January-June slid to 31.87 billion yuan ($5.01 billion) from 39.34 billion yuan a year earlier and came in below the forecast 34.2 billion yuan made by seven analysts polled by Reuters. The fall driven in part by the launch of a nationwide resource tax in China last November.
As a consequence of the gloomy results, CNOOC’s shares fell, closing almost 3% lower at $1.95 in Hong Kong on Tuesday.
When CNOOC, which has only nine years’ worth of reserves based on its current production, announced last month it was bidding on Calgary-based oil and gas producer Nexen, few talked about the other perks the company was getting out of the deal.
Besides becoming the biggest ever foreign investment in Canada, CNOOC’s purchase in the North American country paves the way for China to gain new technology and operational experience that would help it extract its domestic oil.
China hasn’t extracted much of the commodity at home, but experts say it will eventually have to in order to support its expanding economy and keep expensive imports in check. As such, the knowledge acquired in Canada will be handy, writes Judy Hua and Charlie Zhu, for Financial Post.
“The Chinese companies must learn both ends, technology and its operational application […] It is definitely not something that Joe Shmoe comes into and can do efficiently on their own.”
“Key benefits (of buying Nexen) include gaining operatorship of key oil sands assets”
In 2005 the Chinese state energy giant withdrew its $18.5 billion bid to seize American oil company Unocal. The deal would have been China’s largest overseas acquisition ever, but fierce U.S. political opposition forced CNOOC to recoil.
Analysts agree China is now clearly prepared to pay top dollar for access to Alberta’s oil sands offering a more than 60% premium to Nexen shares.
CNOOC is the number one off-shore crude and gas producer in China and for the time being the company is probably more interested in Nexen’s off-shore assets in the Gulf of Mexico, the North Sea and off-shore Nigeria than Nexen’s oil sands operations.
Nexen’s offshore operations account for 70% of its revenue and its oil sands projects, notably Long Lake, have been struggling to produce its promised 72,000 barrels a day.
To date Chinese owned companies have invested over $15 billion in Albertan oil sands developments and roughly 70% of all oil sands production is owned by out of Canada shareholders.
