australia's gas targeted by china

http://www.bloomberg.com/news/2011-04-15/australia-s-gas-may-be-target-for-chinese-buyers-woodmac-says.html

China's national oil companies are likely to target Australian natural gas assets in 2011 through purchases of stakes in projects, according to Wood Mackenzie.

Chinese companies may buy stakes to access about 49.4 million metric tons a year of unsold gas supply from projects in Australia, Edinburgh-based Wood Mackenzie, an energy consultant, said in a report released today. PetroChina Co., China's biggest energy company, has about $40 billion in cash to fund acquisitions this year, Simon Flowers, head of upstream corporate analysis, said in an interview yesterday.

"The principal opportunity for these national oil companies will be Australia," Flowers said at Wood Mackenzie's office in Singapore. "There is still scope for some of the projects with unsold gas. To help the Chinese companies come to a decision on whether to buy the gas, the project can offer an equity stake."

China's energy companies, including Cnooc Ltd. (883), China Petroleum & Chemical Corp. (600028) and PetroChina, spent $45 billion on 60 agreements last year, according to data compiled by Bloomberg. China Petroleum, or Sinopec, made the biggest acquisitions, disbursing $12.29 billion.

"In the past year we've seen Sinopec and Cnooc being very active in North America and that could quite easily continue with them both doing further deals," Flowers said. "The sleeping giant is PetroChina and its parent, which we believe has about $40 billion of capital but has been largely absent while the other companies have been busy."

PetroChina Awakes
PetroChina may have stepped up its expansion. The company on Feb. 10 announced a $5.4 billion agreement with Canada's Encana Corp. to buy half the Cutbank Ridge gas assets, the company's largest overseas purchase to date.

Chinese buyers are unlikely to purchase whole Australian companies with large natural gas reserves such as Woodside Petroleum Ltd. (WPL) or Santos Ltd. (STO) in order to avoid any political conflicts, Flowers said.

"What these companies want is long-term reserves," Flowers said. "However, it's not been the style of the Chinese national oil companies to buy ever since Cnooc got knocked back."

Cnooc's attempted $18.5 billion purchase of Unocal Corp. in 2005 was blocked by opposition from U.S. lawmakers. The company was eventually bought by Chevron Corp.

"What we've seen increasing evidence of globally is to look for long-term reserves and to expand internationally but to do it through minority interests and strategic partnerships on assets," Flowers said.