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April 14, 2022

China’s CNOOC plans to exit Canada, UK, and US due to sanctions concern

CNOOC’s assets in these countries produced approximately 220,000 barrels of oil equivalent per day (boepd) in 2021.

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China National Offshore Oil Corp (CNOOC) is looking to exit its operations in Canada, Britain, and the US over concerns that the Western countries may sanction its assets, Reuters reported, citing industry sources.

The Chinese oil and gas producer is considering selling ‘marginal and hard to manage’ assets in the three countries, amid increasing tension with the Western nations in the wake of Russia’s invasion of Ukraine.

State-owned CNOOC entered the three countries in 2013 through the $15bn acquisition of Canadian oil and gas firm Nexen.  

Last month, the industry source said that the company’s top management found it ‘uncomfortable’ managing the former Nexen assets, owing to higher operating costs.

The assets include stakes in major fields in the North Sea, the Gulf of Mexico, and large Canadian oil sand projects.

These assets reported production of approximately 220,000 barrels of oil equivalent per day (boepd) last year, according to Reuters calculations.

The source said: “Assets like [the] Gulf of Mexico deepwater are technologically challenging and CNOOC really needed to work with partners to learn, but company executives were not even allowed to visit the US offices. It had been a pain all along these years and the Trump administration’s blacklisting of CNOOC made it worse.”

CNOOC said: “We cannot predict if the company or its affiliates and partners will be affected by US sanctions in future if policies change.”

The firm’s assets in the US are located onshore in the Eagle Ford and Rockies shale basins. It also owns stakes in two large offshore fields in the Gulf of Mexico, namely Appomattox, and Stampede.

CNOOC is considering purchasing assets in Latin America and Africa while prioritising the development of new prospects in Brazil, Uganda, and Guyana.

Last month, CNOOC appointed the Bank of America to prepare for the sale of its North Sea assets, worth as much as $3bn.

According to the sources, the Chinese oil firm initiated a global portfolio review prior to its planned public listing on the Shanghai stock exchange, which is scheduled for later this month.

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