Nexen Deal: Why North America Is the New Middle East
The slight problem with North America calling itself the ‘New Middle East’, is that overseas investors will treat it as such. Cue China. The latest $15.1bn offer for Canadian based Nexen, at a whopping 61% premium over its share price, follows a long line of Chinese resource investment in North America. CNOOC has form, holding a stake in MEG Energy and outright ownership of Opti Canada. Its Chinese partner in resource acquisition, Sinopec, has just snapped up international stakes in Talisman, having acquired Addax Petroleum in 2009. The ambitious Chinese outfit holds stakes in Syncrude and Devon Energy, with bids on the table for Daylight Energy - not to mention a white knight bid to help Chesapeake out of a deep shale gas hole. To complete the set, PetroChina has sunk $4bn into Canadian oil sands and British Columbia gas plays. China has even pumped $17bn into American markets since 2010 to keep the donkeys nodding. You get the picture: ‘Seven Sisters’ has become ‘Three Chinese Brothers’ as far as North America is concerned.
But it’s not just in the US and Canada where Beijing has been strutting its stuff in the Americas. They are serious players in Venezuela, Bolivia and Colombia, not to mention Brazil, where China is set to be one of the biggest overseas investors in pre-salt developments. It’s already extended $10bn cash for oil loans to Brasilia, while Sinopec took large stakes in Galp Energia in 2011. Sinopec swept up Repsol’s Brazilian holdings for $7.1bn in 2010, alongside Sinochem’s purchase of the Peregrino oil field from Statoil. It was no coincidence that Premier Wen Jiabao dropped in on Argentina in June 2012 with a view to plugging Ms. Kirchner’s hydrocarbon gaps. The list could go on (and on), but it’s the overall strategic point that needs to be made: China sees the Americas as a vital place to do business to grow (and hedge) its stake in the global energy game.