BOAO, April 19 (Reuters) - China’s offshore oil specialist CNOOC has no plan to buy oil firms abroad during the global financial crisis, and will look instead for foreign partners to make joint investments, chairman Fu Chengyu said on Sunday. Awash with capital and facing strong domestic demand for fuel, Chinese energy firms have been encouraged by Beijing to take advantage of the financial crisis to make overseas acquisitions.
Fu said that due to the ever-intensifying protectionism and the lack of understanding about Chinese companies, CNOOC had to adjust its overseas expansion strategy.
“Our company will not engage in any deals of acquiring other firms in the next couple of years. Instead, we will seek partners who need to make investments and form joint ventures with them,” Fu told a session of the Boao Forum for Asia on the Chinese island province of Hainan.
“This is our future strategy. At least during the financial crisis, we will not buy other firms,” he added.
CNOOC, the parent of CNOOC Ltd 0883.HKCEO.N, has been snubbed in overseas acquisitions, most notably in 2005 when U.S. political opposition blocked CNOOC Ltd's $18.5 billion bid for oil company Unocal.
Realising the difficulties in acquiring firms, China, the world’s second-largest oil consumer, has clearly adopted a loan-for-resources strategy to gain easier access to cash-strapped but energy-rich nations
Beijing in recent months signed a series of loan-for-oil pacts with oil producers Kazakhstan, Russia, Brazil and Venezuela.
At home, CNOOC has offered 17 offshore blocks for foreign cooperation this year, although most of them were tendered a year ago and attracted little interest.
CNOOC normally teams up with foreign firms to hunt for oil and gas off China’s shores, but once a commercial find is made, CNOOC holds the right to take a 51 percent stake in the discovery.
Fu said that the slumping raw material prices and economic downturn offered a good chance for his company to make investments to get ready for the next economic boom.
“Now investment costs are the lowest. Prices will surge again when the economy picks up and inflation rises,” Fu said.
“It’s a good chance for us to invest, both in the upstream and downstream sectors as our construction cycle is about 3-5 years. When the crisis leaves us in 3-5 years, we will be in a more positive position,” he added.
CNOOC has said it aims to increase total investments in 2009 to $16.5 billion, up 26 percent from a year earlier, despite oil price declines that have forced some foreign firms to cut spending plans.
The company also plans to produce 48.05 million tonnes of oil equivalent this year, 14 percent more than in 2008, it has said. (Editing by Ken Wills) (email@example.com; +8610 6627 1268; Reuters Messaging: firstname.lastname@example.org))
Our Standards: The Thomson Reuters Trust Principles.