China’s biggest oil and gas producer plans Western exit as US threatens sanctions
China’s top offshore oil and gas producer, CNOOC, is preparing to ditch its operations in the UK and North America, amid growing fears the company’s assets could be hit with Western sanctions.
Industry sources told news agency Reuters it was weighing up an exit, after the White House warned China last week it could face consequences if the country helped Russia to evade Western sanctions.
The fossil fuel giant holds stakes in major fields in the North Sea, the Rockies, Gulf of Mexico and large Canadian oil sand projects, producing around 220,000 barrels of oil equivalent per day.
In its prospectus ahead of its initial public offering in Shanghai stock exchange later this month, CNOOC said it was uncertain whether it would suffer from Western measures.
It said: “We cannot predict if the company or its affiliates and partners will be affected by US sanctions in future, if policies change.”
Measures so far have included financial restrictions that limit Russia’s access to foreign currency, making it complicated to process international payments.
Multiple countries have banned Russia coal imports, including the EU, while the UK has committed to phasing out Kremlin-backed oil supplies and the US has already banned all Russian fossil fuels.
CNOOC is also hoping to maximise a global rally in oil and gas prices, with intention of luring Western buyers as countries ramp up domestic energy production to substitute Russian energy.
Last month, news agency Reuters revealed CNOOC hired Bank of America to prepare for the sale of its North Sea assets, which include a stake in one of the basin’s largest fields.
The exit being prepared would take place less than a decade after state-owned CNOOC first entered the West – with a $15bn acquisition of Canada’s Nexen.
Ties between China and the West have become increasingly strained amid trade disputes and human rights issues.
This tension has only grown following Russia’s invasion of Ukraine, which China has refused to condemn.
Last October, its US shares were delisted by then-President Donald Trump, which targeted several Chinese companies with penalties in the run-up to the election.
As it seeks to leave the West, CNOOC is looking to acquire new assets in Latin America and Africa, and also wants to prioritise the development of large, new prospects in Brazil, Guyana and Uganda, the sources said.