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Overseas Oil in the Pipeline

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China imported 42.9 percent of its total oil demand last year, down 2.2 percent from 2004 – but it is expected that imports will grow to 44 percent of the total in 2006. Securing sources of supply is an important task for China and its big oil companies, and they are busy taking action.

It is reported that China National Petroleum Corp. (CNPC), parent of the listed PetroChina, plans to double its overseas business volume by 2010. The plan includes pumping over 80 million metric tons of oil and gas annually by 2010 from overseas fields, according to a report quoting CNPC’s overseas business arm, China National Oil and Gas Exploration and Development Corp.

CNPC already has oil and gas assets in 22 countries, and last year formed a joint venture with its PetroChina to hold overseas assets.

In another recent move, CNOOC Ltd., the Hong Kong-listed arm of China National Offshore Oil Corporation (CNOOC) contracted to buy a 45 percent stake in an oil block off the coast of Nigeria for US$2.268 billion.

The failed bid for Unocal seems like a long time ago, and increasingly irrelevant, as China continues to invest far and wide in oil and other resource assets. After all, China still has a lot of foreign money in the bank (US$818.9 billion at the end of 2005), and an almost insatiable demand for resourcescreating some interesting investment opportunities in the sector.

China Business Services provides assistance to sellers of commodities in China, including oil, iron ore, and other materials, and to Chinese companies seeking to invest overseas. Please contact us for further information.

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