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CNPC extends global reach with deals in Australia, Canada

BY WANG XIAOCONG

BEIJING -- CNPC announced two major overseas acquisitions in mid-December as the oil giant continued its accelerated pace of global expansion. CNPC said December 12, 2012 ,it would buy a 10.2% stake in the Browse LNG project in Australia for $1.63 billion from BHP Billiton.Later, CNPC announced that it had partnered with Encana to develop shale-gas fields in northern British Columbia. CNPC paid nearly $2.2 billion for a 49.9% share in a joint venture with Encana.

These agreements and deals earlier in the year brought total overseas oil and gas acquisitions by Chinese companies to $34 billion in 2012. CNPC plans to continue its shopping spree for at least two years. The company wants its foreign wells to produce 200 mtpa by 2015, or about twice its 2012 overseas production level.

The CNPC-BHP Billiton deal is expected to win the Australian government' s approval, particularly since the CNPC is providing capital and mainland customers for the natural gas. It' s the first CNPC gas project in Western Australia and encompasses the largest undeveloped gas reserves down under. Another plus for the project is that its other major stakeholders Shell and a Mitsubishi Co joint venture have a history of successful oil and gas partnerships. But uncertainties remain. Like many LNG projects in Australia, the Browse production schedule has been delayed. A few foreign investors have expressed concerns about the project based on climbing labor costs and the rising value of the Australian dollar against the U.S. dollar.

The Browse project, which includes eastern and western sections, spans three offshore blocks and undersea pipelines. There' s also an onshore LNG processing plant. Total reserves at the Browse site include 15.5 Tcm of natural gas and 415 MMbbl of gas condensate, according to the Australian energy company Woodside Petroleum, which sold its 14.7% stake to Mitsubishi-Mitsui last may. CNPC says the completed project will cost $31.5 billion and have an annual capacity of 12 million tons of LNG. The company' s deal includes an 8.33% stake in East Browse and a 20% interest in West Browse.

Encana officials say they welcome CNPC' s involvement in the shale gas project, which already includes nine wells. And PFC analysts say although natural gas prices in North America have fallen in recent months, the long-term price outlook is good.

Dow Jones Newswires

01/06/2013

 

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