Deals & News

RECORD SPENDING (May 7, 2010)

Spending by Chinese companies on mining and energy acquisitions reached a record $32 billion last year. China Petroleum & Chemical Corp, Asia's largest refiner, said on March 28 it will pay $2.5 billion to purchase a stake in an Angolan oilfield from its parent to boost production.

"A total investment of not less than $60 billion is needed to form our five regions of global oil and gas cooperation, by 2020," Jiang said. PetroChina spent between $2 billion and $3 billion annually in the past five years, so the planned investment "is clearly a step up," Beveridge said.


"Investors have been encouraged by what the company has had to say about acquisitions overseas," said Shi Yan, an analyst at UOB-Kay Hian Ltd in Shanghai. "They are putting forward a lot of money to buy assets and it also involves a significant increase in the production of oil and gas."



Haier, for example, is doing well at the low end of the Indian market, in much the same way that its keenly priced mini-refrigerators are a big hit in U.S. student dormitories.

The telecommunications equipment manufacturers Huawei and ZTE Corp have also shown powerful growth without significant acquisition.


Rattled by rapidly rising global grain prices, China is looking at strategies to ensure long-term food security for its 1.3 billion people such as procuring farmland overseas and opposing the formation of any international grain price- fixing monopolies.

To counter growing domestic challenges in ensuring food self-sufficiency, China is drafting a policy to encourage agricultural companies purchasing farmland abroad.

While Chinese state banks and oil companies have made numerous investments overseas, snapping contracts for oil and mineral resources, there has been little official incentive so far for Chinese agricultural companies to venture abroad.

Nevertheless, Chinese companies have forged a series of farming deals and taken land concessions in countries in Southeast Asia and Africa, harvesting oil palm, eucalyptus, teak, corn, cassava, sugar cane and other crops.

PETROCHINA PLANS $60B OF OVERSEAS EXPANSION (May 7, 2010)

PetroChina Co plans to spend at least $60 billion in the next decade on overseas acquisitions, challenging Exxon Mobil Corp and BP Plc in the race to control oil and gas fields.

"Ten years ago, PetroChina was a State-owned oil company, but now we have a goal of becoming an international, integrated energy company," Jiang Jiemin, chairman of the world's largest company by market value, said in an interview, where he announced the investment plan.

Beijing-based PetroChina spent almost $7 billion in the last year to buy refineries and reserves in Australia, Canada, Singapore and Central Asia. The expansion pits PetroChina against Irving, Texas-based Exxon, which agreed to pay about $30 billion for US gas producer XTO Energy Inc in December.

"Every five, 10 years or so, you'll get the occasional $30 billion deal, but this is at least $6 billion every year and that's significant for any major oil company," said Neil Beveridge, an analyst at Sanford C. Bernstein Ltd in Hong Kong. "This puts PetroChina on par or exceeding some international oil majors in spending."

Exxon is counting on gas to provide the bulk of its future growth with the acquisition of XTO Energy as well as new developments from the South Pacific to the Celtic Sea. BP, vying with Royal Dutch Shell Plc as Europe's biggest oil company, paid at least $8.3 billion to acquire assets over the past 12 months. PetroChina teamed up with Shell last week to buy Australian gas producer Arrow Energy Ltd for $3.2 billion.

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