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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (65703)6/30/2005 7:32:16 AM
From: energyplay  Read Replies (3) of 74559
 
Viewed strictly from a future negotiating point, CNOOC recent announcements may have marked up the price of every oil asset in the world, from nearly exhausted North Sea wells to speculative exploration blocks off Tasmania.....

1) They have made it clear how much they and China want oil assets

2) They have shown that they have a huge bankroll, courtesy of the central government

3) Everyone in the world with an oil property now knows this, and they know that anyone else selling will know it too, so why take low offers when 1) means China will have to multiple assets.

*****

Considering how much most Western oil companies want to sell to China, or explore in the South China Sea, you would think CNOOC could use that as a carrot to pull the firms into joint ventures, and then use China's lower cost of capital as an inuducement to set up joint ventures in other parts of the world. This could deliver access and effective control of oil at a discount rather than a high premium.

With the cash flow from $50 + oil, there won't be much pressure on sellers to make a deal.

I expect the premium for oil assets will be quiet high.

I will bet some sellers are estimating how much oil production China needs to buy, and dividing that number into the 600 Billion foreign reserve to get an upper limit on what might be paid for each barrell of proven undeveloped....

By the way, your expectation of Chinese firms buying brands and market access was spot on. Lenovo- ThinkPad and Haier - Maytag obviously. There's also a nice patent position with some of the Maytag items.
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