October 15, 2010
The Trumpet
Chinese state-run oil giant Cnooc has agreed to pay $2.16 billion for a third share of 600,000 acres of Texas oil and gas fields, marking the largest ever Chinese purchase of United States energy assets. The agreement grants China a foothold in the booming U.S. energy market and will also equip it with American know-how about tapping deposits captured in dense shale rock formations.
Photo: China’s recent energy purchases include shares in Texas oilfields. (Mira Oberman/AFP/Getty)
The deal, which will give the state-owned Chinese energy giant 33.3% ownership of Oklahoma City-based Chesapeake Energy assets, also allows China to test the political waters for further expansion into U.S. energy reserves.
The properties have an estimated potential production of up to half a million barrels a day of oil equivalent.
The International Energy Agency estimates that China is home to 26 trillion cubic meters of shale gas reserves, which the country has not yet tapped because of a lack of drilling know-how. The knowledge and technology China will acquire in the Chesapeake Energy deal will likely allow it to exploit these domestic reserves.
The agreement is latest in a series of similar deals by China around the globe. Beijing’s outward foreign direct investment will intensify as its campaign to fuel China’s booming economy marches on.
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