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China’s biggest offshore oil and gas producer is preparing to exit operations in the US, UK, and Canada due to concerns around sanctions, a report says

China's biggest offshore oil and gas producer is preparing to exit operations in the US, UK, and Canada due to concerns around sanctions, a report says
oil drills

Sources told Reuters that CNOOC has begun reviewing its global portfolio as it prepares to list on the Shanghai Stock Exchange this month.Imigenima / Getty Images

  • Sources told Reuters that CNOOC is preparing to exit the United States, the United Kingdom and Canada due to sanctions concerns.

  • A senior industry source told Reuters the assets were “marginal and difficult to manage”.

  • Following an executive order by Trump, CNOOC was delisted from the New York Stock Exchange in October 2021.

Industry sources told Reuters that CNOOC, a Chinese state-owned offshore oil and gas producer, is preparing to exit its US, UK and Canadian operations due to concerns about sanctions, regulations and costs.

A senior industry source told Reuters the company wanted to sell “marginal and difficult to manage” assets in the three countries. They said CNOOC’s senior management found it “inconvenient” to manage Western assets due to regulations and high operating costs.

CNOOC entered the three countries through a $15 billion acquisition of Canadian oil and gas giant Nexen that closed in 2013.

The company has been listed on the New York Stock Exchange since 2001 but the administration of former President Donald Trump added CNOOC to the list of countries it claimed to be owned or controlled by the Chinese military in December 2020. Following an executive order by Trump, CNOOC was delisted from the New York Stock Exchange in October 2021, the company said.

It was removed from the blacklist by President Joe Biden’s administration in June 2021.

“Assets like the deep waters of the Gulf of Mexico are technologically challenging and CNOOC really needs to work with partners to learn, but company executives have not even been allowed to visit US offices,” the senior industry source told Reuters. “It has been painful all these years and the Trump administration’s blacklisting of CNOOC has only made it worse.”

The sources told Reuters that CNOOC wanted to exit operations due to concerns in Beijing that the assets could face Western sanctions. US Deputy Secretary of State Wendy Sherman said last week that if China helped Russia “in any material way” amid sweeping sanctions from the West, China itself could be hit with sanctions.

CNOOC did not immediately respond to an Insider’s request for comment outside of normal business hours.

The sources told Reuters that CNOOC has begun reviewing its global portfolio as it prepares to list on the Shanghai Stock Exchange this month.

CNOOC plans to buy assets in Latin America and Africa as it prepares to leave its western operations, the sources said. In its 2021 annual report, the company said it was looking to increase production in the Bohai Sea and the South China Sea as well as parts of Guyana.

Reuters reported that CNOOC is China’s largest oil and gas producer. In its annual report, it said it produced, on average, about 1.57 million barrels of oil equivalent per day in 2021, of which 62,000 were from sites in Canada and 80,000 from other sites in North America. Reuters has calculated that CNOOC’s assets in the US, UK and Canada together produce about 220,000 barrels of oil equivalent per day.

In the United States, CNOOC has onshore assets in the Eagle Ford and Niobrara shale basins and also has offshore interests in the Stampede and Appomattox fields in the Gulf of Mexico. In the UK, it operates three sites in northeastern Scotland, and has oil sands and shale gas assets in Canada.

The West imposed massive sanctions on Russia after it invaded Ukraine in late February. This includes targeting the huge oil and gas industry. US President Joe Biden has vowed to ban Russian energy imports, Germany has halted plans for the Nord Stream 2 pipeline, and Lithuania has said it has become the first EU country to completely cut off Russian gas imports.

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