CNOOC's Star Rising Amidst The Rubble
Following Petrochina, CNOOC would be my best pick, owing to it being the next big A-share listing by the H-shares. However, the edgy markets for the past 2 weeks may be delaying the A-share plans somewhat. Another thing to bear in mind is that the covered warrant is expiring in February 2008, which would have been ideal a few weeks back, but owing to the postponed A-share listing, may be a bit too short in life span to cover the Shanghai listing. Still, cannot beat CNOOC, especially when the Shanghai index gets closer to the crucial 5,000 level, which I am expecting to be a good base building area for China shares.
Call it coincidence, foresight or good planning, CNOOC's in the news today that it is considering buying interests in Nigerian blocks held by Royal Dutch Shell PLC- the latest indication of China's rising assertiveness in Africa's oil sector. As reported in the WSJ:
Shell is considering selling interests in two Nigerian offshore blocks as it restructures its business in the troubled region, people familiar with the matter said Tuesday. A block is a geographic area of territory over which the owner holds exploration and drilling rights. The Anglo-Dutch oil company has said it expected to sell about US$9 billion in assets in 2007. The block stakes, each amounting to 49.8%, could fetch as much as $900 million, adding that Nigerian oil companies had also expressed interest. Agip, a unit of Eni SpA, holds the remaining 50.2% in each block.
In January 2006, CNOOC, China's largest offshore operator by output, bought a 45% interest in Nigeria's Akpo field for US$2.27 billion. The same month, it bought a 35% interest in the license to explore for oil in a Nigerian offshore block. China is on course to overtake the U.S. as the world's largest energy consumer soon after 2010, according to the International Energy Agency, but its domestic oil production is set to peak around the same time, leaving a supply gap that will have to be filled by foreign oil. As a result, Chinese oil companies are investing massively in Africa, searching for oil to fuel the country's booming economy.
Sinopec, paid US$692.2 million for stakes in three deepwater oil blocks in Angola last year. China National Petroleum Corp., the parent company of PetroChina Co., has interests in Sudan. In addition to direct investments by oil companies, China's government has used a strategy of offering loans and aid to African countries to secure access to resources.