China has made a dramatic swoop on the North Sea oil industry, buying up assets that account for more than 8pc of the UK’s entire oil and gas production.
Chinese state-controlled group CNOOC agreed a $15.1bn (£9.7bn) offer to buy Canada’s Nexen, which is the second biggest oil producer in the UK North Sea. Its net UK production of both oil and gas is 114,000 barrels of oil equivalent per day (boepd).
In a separate deal, China’s Sinopec splashed out $1.5bn on a 49pc stake in the UK unit of Canada’s Talisman Energy, which produced an average of 71,500 boepd last year. Talisman said its joint venture with Sinopec would “invest more in the UK than Talisman would have on its own”.
Both Nexen and Talisman rank within the top 10 oil and gas producers in the UK North Sea. The UK’s entire oil and gas output stood at 1.8m boepd in 2011, according to industry body Oil & Gas UK.
Nexen, which is listed in both New York and Toronto, also has assets in Canada, the Gulf of Mexico and off the coast of Nigeria. The CNOOC offer price of $27.50 a share is a 61pc premium to Nexen’s closing share price in New York on Friday.
CNOOC will require approval not only from Nexen’s shareholders but also from Canadian regulators, who can block foreign takeovers if they deem them not to be in Canada’s best interests. CNOOC has pledged to seek a listing in Toronto if the deal is approved.
Oil & Gas UK said Monday’s deals reflected “the renewed attractiveness of our province as a place to invest”. It added: “Given the new ownership, we would expect investment activity to remain high.”
The deals are the latest of a spate of Chinese interest in UK energy and infrastructure assets.
Two Chinese nuclear companies have backed rival bids for Horizon, the venture being sold by RWE and E.ON, which plans to build reactors on Anglesey and in Gloucestershire.
In January, China’s sovereign wealth fund bought a 9pc stake in UK utility Thames Water.