Pay no attention to the little man behind the screen.China continues its attempt to become a major global oil producer. Having mishandled and prematurely depleted the reserves within its own borders, it has embarked on a strategy of global acquisitions. The latest acquisition attempt, is a big step for the Chinese, as they are reportedly attempting to buy a top tier U.S. oil and exploration company.
According to the Wall Street Journal, citing a Financial Times report: "China's third-largest oil and natural-gas company is eyeing Unocal Corp., the ninth-largest oil company in the U.S. -- the latest sign of how China's search for oil, commodities and consumer markets is fueling Chinese acquisitions overseas. The interest by China National Offshore Oil Corp. is highly preliminary, say people familiar with the matter, who add that there are no assurances a deal will ever be struck. It's unclear whether the company is interested in all or part of Unocal."
The reasons for the interest are obvious. Unocal is a pure play on exploration and energy assets. The company is no longer involved in retail operations, and "is viewed as a likely takeover target. The El Segundo, Calif., company has amassed an attractive array of oil and gas assets in Southeast Asia, but is still considered relatively underpriced. After selling off its refineries and gas stations in 1997, the company has focused purely on exploration and production, generally considered the high-profit part of the oil industry."
This is a bold move by China. And the announcement could be a trial balloon. And if it is such an attempt to test the waters, it looks to us as if it's been a success. No real answer has come from the White House or any other U.S. government agency.
RigZone
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