China refines overseas oil grab strategy
* Companies to hire more locals
* Companies say driven by profits not politics
* CNPC plans Houston research centre
By Tom Bergin
LONDON, Dec 9 (Reuters) - Chinese oil companies are changing their approach to investing in oil and gas projects overseas, placing more emphasis on community development and less on Beijing's political goals.
Over the past decade, China's state-controlled energy giants have been the most prolific buyers of oil and gas companies and fields internationally, spurred by a government policy to secure resources to fuel the country's economic boom.
But the companies have been accused of linking their help for less developed nations to the sale of energy assets and of cosying up to pariah regimes.
Senior officials with state-controlled oil giants CNPC and CNOOC said at a major industry gathering in Qatar this week that they would behave more like big Western international oil groups such as Royal Dutch Shell Plc and Exxon Mobil.
"You will see more (Chinese companies) using the same practices as others," Chen Weidong, Chief Energy Scientist with China National Offshore Oil Corp (CNOOC), told Reuters in an interview.
"All the Chinese companies are changing quickly."
The big Western oil companies grew out of one-sided deals with African and Middle Eastern countries in the early 20th century.
But in recent decades the balance of power has shifted towards resource holders, requiring oil majors to offer better deals.
Companies like Shell, for example, use an ability to help build up a local oil services industry as a calling card to gain access to resources.
But Chinese companies are still better known for flying in work crews to construct pipelines and plant, rather than hiring locals in the underdeveloped African or Latin American countries where they typically invest.
Zhou Jiping, vice president of CNPC, the country's largest oil group, said his company was changing its approach.
"We are going to employ more local staff, pay more attention to local community needs for better education, health and environmental protection and promote local infrastructure construction," he told the World Petroleum Congress this week in Doha.
While the purpose of Beijing giving companies tens of billions of dollars for acquisitions was to secure resources, Chinese companies have now largely abandoned the plan to bring new supplies of oil and gas back to the Chinese mainland.
"They ship back less than 10 percent. Maybe 5 or 6 percent come home," he said.
The change in strategy is not purely altruistic. Chinese companies have realised the way they worked in the past has prompted frustration and could make governments reluctant to give them access to resources in future.
The change of heart is also being driven by simple economics.
"Chinese workers are no longer cheap. When you move the people from home to the remote area, you provide all the accommodations. That cost adds up," CNOOC's Chen said.
Chen said increasingly overseas expansion was driven by the simple need to develop the companies' business.
Western oil executives and bankers said there were signs Chinese state companies were increasingly driven by a commercial rather than a political imperative.
"Initially Asian companies were acquiring assets in order to secure access to hydrocarbons, but more and more they are looking for profitability, like IOC (International Oil Companies)," Patrick Pouyanne, Deputy General Manager of Petrochemicals at French oil company TOTAL said.
"They are behaving more and more, I would say, like an ordinary company, a more traditional private company," he added.
The more nuanced approach means that when China goes overseas to secure energy resources in future, it will not only focus on physical assets.
Zhou said CNPC planned to establish a research institute in Houston, Texas, to help build up the company's expertise in finding and developing oil and gas.
"We can use the local resources to refresh our ideas and thinking, to make much better innovation in the future," he said.
But in some respects, Western countries want politics to play a greater role in China's energy outlook.
Its policy of non-intervention in other countries' domestic politics means it has not subscribed to oil investment bans promoted by Western countries.
This has given its companies free rein to snap up assets in Myanmar and Sudan, and allows Chinese operators to remain in Syria while companies like Shell and Total shut down operations.
David Howell, British junior minister for foreign affairs and international energy policy, told the Doha gathering that China now had an obligation to support sanctions on pariah states.
"Once you get to be involved around the world in a major way, in major contracts, major energy developments in Africa, in Latin America, in the Indian Subcontinent and many other places as well, there comes a need ... to sign up to involvement of a responsible and balanced kind," he told the WPC.
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