Chinese oil companies went on a buying spree this week. On Monday, Cnooc, the offshore component of China’s three-headed, state-owned oil apparatus, agreed to pay $15 billion cash for Canada’s Nexen (NXY). Not to be outdone, Cnooc’s state-owned cousin, Sinopec, quickly cut a deal to buy a 49 percent stake in Talisman Energy (TLM)‘s British unit for $1.5 billion, giving it access to North Sea oil and natural gas fields. Two days later, Royal Dutch Shell announced it had signed a handful of partnerships with Cnooc and CNPC, China’s largest oil and gas company, for offshore exploration projects ranging from the coast of China to West Africa.
While the immediate thought might be that China is looking to feed its voracious demand for energy, only a scant amount of what’s produced from these projects is likely to flow back into mainland China for consumption. Assuming the Nexen deal gets approved (Senator Charles Schumer [D-N.Y.] wants to block it), Cnooc will acquire assets all over the world, including reserves in the Canadian tar sands, the deep water Gulf of Mexico, the North Sea, and West Africa.