BEIJING, July 8 (UPI) -- China's leading oil companies have boosted overseas acquisitions during the first half of 2009 because of increased domestic demand and falling prices, a Shanghai Securities News report stated Tuesday.
China, the world's second-largest consumer of energy, depends on imported oil for nearly half of its needs.
China's oil consumption has grown approximately 5 percent annually in recent years. Its sales of passenger vehicles rose 47 percent in May, further accelerating the need for fuel.
Customs data show that China's net crude-oil imports rose to 16.62 million tons in May, a 14-month high, as demand increased ahead of the peak summer period.
To meet the country's rising fuel demand, Chinese oil giants are setting out on an ambitious overseas acquisition strategy, capitalizing on lower crude prices amid a playing field of cash-strapped foreign oil companies.
Just last week, China National Petroleum Corp. and China's top offshore oil and gas producer, China National Offshore Oil Corp., made a bid for Spanish oil major Repsol's Argentine unit YPF.
That deal followed the June 30 contract CNPC secured with Britain's BP PLC to develop the Rumaila oil field in Iraq, which boasts the third-largest oil reserves in the world. It also planned to bid on the auction of two oil blocks in Venezuela together with Total, based in France.
PetroChina, a subsidiary of CNPC, completed the purchase of a 45.51 percent stake in Singapore Petroleum Co. June 21.
On June 25, CNPC's lesser rival, Sinopec Group, agreed to acquire the Geneva-based oil and gas producer Addax Petroleum Corp.
China Aviation Oil (Singapore) Co. Ltd., a subsidiary of China National Aviation Fuel Group, China's largest producer and distributor of jet fuel, recently announced its intent to purchase a refinery in South Korea.
State oil trader Sinochem and CNOOC also led a consortium to enter a bid for Iraq's Maysan oil field complex, which eventually failed in June.
"These acquisitions imply that some foreign resource enterprises were caught with liquidity difficulties caused by the global financial crisis," said Zhou Fengqi, former director of the Energy Research Institute under the National Development and Reform Commission said Tuesday, reports the China Daily.
"The timing is now good for domestic oil companies to make overseas deals as they can buy assets cheaper," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the China Daily.
"But Chinese oil companies should select quality assets prudently," cautioned Fengqi.
