Thursday, February 2, 2012

China Reinforces Energy Supplies Through US

BEIJING—Chinese institutions unveiled three separate energy deals in North America and Europe on Thursday that underscore Beijing's continued interest in foreign assets as it looks for supplies to feed its booming economy.

State-controlled PetroChina Co., the Hong Kong-listed unit of China National Petroleum Corp., said it bought a 20% stake in a Canadian shale-gas project owned by Royal Dutch Shell PLC. Terms weren't disclosed. The deal marked the latest in a string involving North American shale-gas projects, which tap previously unreachable supplies and have transformed the U.S. energy industry.

Meanwhile, sovereign-wealth fund China Investment Corp. acquired a minority stake in asset-management firm EIG Global Energy Partners, according to the U.S.-based firm. A spokeswoman for CIC declined to immediately comment, and EIG didn't disclose financial terms or the size of the stake. EIG said it has investments in oil and natural-gas projects, as well as in alternative-energy technologies such as geothermal and wind power.

The investment involves no associated voting rights, EIG said, adding that CIC is also an investor in some funds managed by EIG.

In Spain, a unit of state-controlled China National Offshore Oil Corp. struck a deal with closely held solar-power-equipment maker Isofoton SA to create a joint venture that will develop solar-power projects mainly in China, a spokeswoman for Isofoton said. The venture's initial investment is estimated at $300 million for the development of 150 megawatts during 2012, and the funds will be provided by the Chinese company, she said. In addition, Cnooc will manufacture energy-storage batteries on a large scale for the venture.

The deals come as China looks to secure supplies in uncertain times. International pressure to curb business with Iran, a major oil supplier, and turmoil involving another supplier, Sudan, have called attention to China's vulnerability to disruptions in energy supplies.

China has moved cautiously recently—acquiring minority stakes and establishing joint ventures—after earlier attempts to make big purchases encountered significant political pressure and ultimately faltered, including a bid for U.S.-based Unocal, now part of Chevron Corp.

PetroChina said it bought the 20% stake in Shell's Groundbirch project, in northeastern British Columbia. PetroChina hopes to gain experience in the exploration and development of unconventional gas resources through its cooperation with Shell, the Chinese company said in a written statement. Groundbirch's natural-gas output is 125 million cubic feet per day, the company said.

Shell said the deal is the latest example of its strategic cooperation with PetroChina parent CNPC.

The acquisition comes days ahead of a visit to China by Prime Minister Stephen Harper of Canada. In December, Mr. Harper said Canada was "very serious" about focusing its efforts on selling oil and natural gas to Asian countries.

PetroChina, Cnooc and China Petroleum & Chemical Corp.—known as Sinopec—have all invested heavily in Canada's oil and natural-gas patch during the past two years. In January, PetroChina paid 680 million Canadian dollars (US$681 million) to buy the 40% of the MacKay River oil-sands project in northern Alberta that it didn't already own. Last year, Sinopec paid C$2.2 billion for Daylight Energy Ltd., a Canadian conventional oil and natural-gas company.

North America's energy sector has been transformed in recent years by the ability of natural-gas producers to crack tight rock formations known as shale by injecting streams of water and chemicals. At the same time, companies are also pushing ahead quickly to unlock the billions of barrels of oil trapped in Canada's vast reserves of oil sands.

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