China has consolidated its oil and gas production industry around three companies, the top three oil companies in China: 1) PetroChina, a state energy giant, whose parent company is China National Petroleum Corp (CNPC); 2) Sinopec (China Petroleum & Chemical Group); and 3) China National Offshore Oil Corporation (CNOOC). PetroChina and Sinopec are two of the five biggest oil companies in the world.

China has traditionally protected its own oil and gas companies by not allowing foreign oil companies into China. PetroChina and Sinopec control the refineries that produce 90 percent of domestically-produced gasoline and diesel. They also control a large portion of China’s gas stations and are able to squeeze out independent operators by restricting their supplies of gasoline.

Between 1982 and 2005, there was US$7 billion in foreign investments on China’s oil industry. These the Chinese pretty much run their own show and foreigners and foreigners have relatively little involvement in Chinese energy projects except as shareholders but compete with Chinese companies overseas. Foreign companies that have done business in China include Exxon, BP and Royal Dutch/Shell. They were involved in exploration and running gas stations under their names. Exxon Mobile helped Sinopec establish over 500 gas stations across the country. Chevron is working with CNOOC on a couple of relatively small projects. In the fall of 2004, Royal Dutch/ Shell Group and Unocal pulled out of a Chinese offshore as development project, siting commercial reasons.

Oil Business in China

Price controls aimed at keeping inflation in check and fuel prices affordable to ordinary Chinese have saddled refiners with billions of dollars of losses. Refiners have to pay higher prices when oil prices rise but are kept by the price controls from passing on the expense to their customers. As of 2005, Sinopec and PetroChina were allowed to set fuel prices within an 8 percent range of the government’s recommended price. Sometimes the government has given subsidies of hundreds of millions of dollars to the companies but not nearly enough to cover losses resulting from high oil prices.

The Economist reported Chinese oil companies are not like Western oil firms. As arms of the state (more powerful than the environmental-protection ministry) they have a lot of say in writing their own rules. That is perhaps why in much of China regulations for a long time allowed the sulphur content in petrol to be as high as 150 parts per million, whereas European standards cap it at 10 ppm. [Source: The Economist, February 16, , 2013]

In December 2010, the United States filed a suit with the WTO claim the Chinese government gave Chinese energy companies unfair government subsidies. According to The Chinese energy market has been reformed to lower the threshold for foreign and smaller companies to enter the market. Rules have been changed such as the requirement of the participation of a Chinese company in business endeavors. Also, ownership of infrastructure and production activities have been decoupled meaning producers cannot own infrastructure to prevent discrimination of competitors. [Source:, December 26, 2020]

Biggest Oil Companies in China

Five Biggest Oil Companies in China
1) China National Petroleum Corporation (CNPC) See Below
2) Sinopec (China Petroleum and Chemical Corp) See Below
3) China National Offshore Oil Corporation (CNOOC) See Below
4) Sinochem Group. Founded in 1950. and headquartered in Beijing, it earned $63.5 billion in revenue in 2021 and was ranked 151st on the Fortune Global 500 list in 2021. Sinochem owns more than 300 subsidies including Sinochem International, China Jinmao, and Sinofert.
5) Shaanxi Yanchang Petroleum. Founded in 1905 and headquartered in Xian, Shanxi Province, earned $47.5 billion in revenue in 2021 and was ranked 234th on the Fortune Global 500 list. [Source: Investopedia /]

The largest oil companies in the world by market cap as of March 2022: 1) Saudi Aramco ($2.2 trillion), 2) Exxon Mobil ($349 billion), 3) Chevron ($320 billion), 4) Shell ($208 billion), and 5) PetroChina ($145 billion). /\

The largest companies in the world (Fortune Global 500 2021): 1) Walmart; 2) State Grid (Electricity, China); 3) Amazon; 4) CNPC; 5) Sinopec. The largest oil companies in the world based on revenues in 2021: 1) Saudi Arabian Oil Co. (Saudi Aramco); 2) PetroChina; 3) Sinopec; 4) Exxon Mobil; 5) Total Energies; 6) BP; 7) Marathon Petroleum Corp; 9) Valero Energy Corporation

China National Petroleum Corporation (CNPC, PetroChina)

China National Petroleum Corporation (CNPC) is China’s largest oil producer and oil company, producing about two thirds of China’s crude oil. Founded in 1988 and headquartered in Beijing, it is the world’s largest oil producer by revenue and production volume. The company was No. 4 on the Fortune Global 500 list with $284 billion in revenue in 2021 and has about 432,000 employees. PetroChina is the listed arm of state-owned CNPC. It was created in 1999 by the Chinese government to secure more oil for that nation's booming economy. The Chinese government owns 86 percent of its stock and China uses nearly every drop of oil PetroChina secures domestically. [Source: AP, Investopedia]

In November 2007, PetroChina became the world’s largest oil company in a matter of a few hours when it debuted on the Shanghai Stock Exchange and raised $8.9 billion in its first initial public offering (IPO), with stock prices doubling in a single day, raising its value by some measures to $1 trillion, more than double the value of Exxon-Mobile, the world’s largest company before it was overtaken by PetroChina. The value of Petrochina quickly fell after its IPO made it the world’s first $1 trillion company. The $1 trillion figure was reached by multiplying the total number of stocks by the $5.90 price the stocks were selling for on the Shanghai market at the end of PetroChina’s debut. The figure was misleading because the government owns 86 percent of PetroChina’s shares and prices for PetroChina shares were only around $2.50 in Hong Kong and New York.

CNPC sells petroleum, natural gas, and petrochemicals. Its output in 2020 was 178.64 million metric tonnes or crude oil and 160.35 billion cubic meters of natural gas. The company operated 22,612 service stations in 2019 and was led by Chairman Dai Houliang and President Li Fanrong. PetroChina stock is sold on the New York, Hong Kong and Shanghai stock exchanges. The American billionaire Warren Buffet bought shares of PetroChina for about 20 cents a share and sold them in September 2007 for seven time she price he paid for them. [Source: Wikipedia +]

CNPC's Financial Data for 2020
Revenue: US$311.2 billion

Operating income: US$130 billion
Net income: US$70 billion

Total assets: US$610 billion
Total equity” US$346 billion +

Growth of CNPC

PetroChina grew rapidly in the 2000s and 2010s by squeezing more from China's aging oil fields and outspending Western companies to acquire more petroleum reserves in places like Canada, Iraq and Qatar. It's motivated by a need to lock up as much oil as possible for China. According to Associated Press:“PetroChina has grown by pumping everything it can from reserves in China, estimated to contain more than 6.5 billion barrels. It drilled thousands of oil wells across vast stretches of the nation's northern grasslands. Some of those fields are ancient by industry standards, dating close to the beginning of China's communist government in the 1950s. The commitment to aging fields distinguishes PetroChina from its biggest Western rivals. Exxon and other major oil companies typically sell their aging, low-performing fields, or they put them out of commission. [Source: Chris Kahn, Associated Press, March 29, 2012]

PetroChina was the most profitable company in Asia in the second half of 2004 and produced 1.034 billion barrels in 2005, a 5.5 percent rise from 2004 after drilling new fields in western and northeastern China. PetroChina gets half its oil from Daqing and controls much of the oil in Changqing. It own 67 percent of PetroKazahkstan and has had success drilling for gas in western China. PetroChina became the world’s third largest energy company by market value in 2006, overtaking BP and Royal Dutch Shell. It posted a record output of the equivalent in oil and gas of 2.9 million barrels of oil a day, a 5.2 percent increase from the 2005. Gas production jumped 23.5 percent in 2005.

At the end of December 2007, PetroChina was valued at $738 billion, compared to $510 billion for Exxon and $231 billion for BP. By other measures PetroChina is much smaller than Exxon-Mobile. In 2006 Exxon-Mobile produced 1.56 billion barrels of oil, racked up sales of $365.5 billion with profits of $39.5 billion while PetroChina produced 1.06 billion barrels of oil, racked up sales of $91.9 billion with profits of $19 billion. PetroChina’s growth prospects however are better than those of Exxon-Mobile. It is expect to grow 5 to 6 percent over coming years while Exxon-Mobile and other major oil companies are not expected to grow at all. PetroChina could have raised more money in its Shanghai debut: investors overbooked the issue by a record $440 billion. PetroChina reported profit declined in 2008 as loses in the refining business caused by government price controls exceeded gains from surging crude oil prices.

In 2011, PetroChina surpassed Exxon Mobil to become the world's biggest publicly traded producer of oil. According to Associated Press: PetroChina announced that it pumped 2.4 million barrels a day in 2011, surpassing Exxon by 100,000. According to Associated Press: While PetroChina sits atop other publicly traded companies in oil production, it falls well short of national oil companies like Saudi Aramco, which produces nearly 8 million barrels a day. And Exxon is still the biggest publicly traded energy company when counting combined output of oil and natural gas. PetroChina ranks third behind Exxon and BP in total output of oil and natural gas.[Source: Chris Kahn, Associated Press, March 29, 2012]

Petrochina Deals

PetroChina has acquiring new reserves in Iraq, Australia, Africa, Qatar and Canada. Since 2010, its acquisitions have totaled $7 billion, about twice as much as Exxon, according to data provider Dealogic. PetroChina has 20 contracts to explore or purchase production facilities in 12 countries, including Peru, Tunisia, Azerbaijan ad Mauritania. CNOOC paid $2.3 billion for a stake in an offshore oil field in Nigeria. It has a deal with the BHP Billiton to search for oil off the coast of western Australia It also has deals to develop the North West Shelf and the Gorgan natural gas site off the northwestern coast of Australia. In 2007, PetroChina signed a $40 billion deal to develop the Browse Basin natural gas project off the coast of Western Australia. In January 2010, PetroChina pulled out of the deal. In September 2009, PetroChina said it would invest $1.7 billion in Canadian oil sands.

In January 2012, PetroChina took full ownership of the MacKay River oil sands project in Canada after Athabasca Oil Sands Corp sold the remaining 40 percent of the development for US$673 million. The deal gives PetroChina full control of one of Alberta's newest oil sands developments. Athabasca had previously sold PetroChina a 60 percent stake in two oil sands projects owned by Athabasca. [Source: AP, January 3, 2012]


Sinopec (China Petroleum & Chemical Group) is China’s second largest oil and gas producer and Asia’s biggest refiner. Founded in 1983 and headquartered in Beijing, it is China's largest supplier of oil and its second-largest producer. The company ranked No. 5 on the Fortune list of the global 500 companies in 2021, with revenues of more than $283.7 billion. It has about 384,000 employees. [Source: Investopedia]

In 2010, Sinopec supplied 80 percent of China’s fuel and broke into the top 10 of the Fortune 500 list of top global companies when Its profits increased 13 percent to $10.9 billion. The company earns less money than it could because it is forced to sell oil products at lower-than-market prices because of government pressure. Many refined products are sold at below cost. Sinopec produces fuels, natural gas, lubricants, petrochemicals and had 249,142 employees in 2018. Key people including Chairman Zhao Dong, Vice Chairman & President Dai Houliang and Vice President Chang Zhenyong. [Source: Wikipedia]

Sinopec Financial Data for 2017
Revenue: US$314.4 billion
Operating income: US$13 billion

Net income: US$10.5 billion
Total assets: US$238 billion
Total equity: US$127 billion

Sinopec refined 2.8 million barrels of oil a day in 2010. At that time the company made money from its exploration and production divisions and lost money from its refining and made and lost money from its chemicals operations. Sinopec produced almost 40 million tons of crude in 2006, an increase 1.4 percent from the previous year; and 7 billion cubic meters of natural gas, an increase 11 percent from the previous year Sinopec has its fingers in a lot of pies. It and BASF operate a $2.9 billion chemical plant in Nanjing, Sinopec operated 7,100 kilometers of crude pipelines at the end of 2012. It also has lots of natural gas pipelines

Sinopec’s former CEO Fu Chengyu was appointed in April 2011. He is an urbane, English-speaking petroleum engineer and Central Committee member with a degree from the University of Southern California. His predecessor, Su Shulin, became the deputy Party chief in Fujian Province, following in the footsteps of another former oil executive, Zhou Yongkang, who became a Poliburo Standing Committee member responsible for China’s vast security apparatus. [Source: Andrew Higgins, Washington Post, May 6, 2011]

Sinopece Acquisitions

Sinopec has a stake in a $5.5 billion plan drawn up by the Alberta-based Enbridge company to build the Northern Gateway Pipeline from Alberta to the Pacific coast province of British Columbia. Sinopec also paid $4.6 billion for a 9 percent stake in Syncrude, Canada's largest oil sands project. In March 2004, Sinopec signed a $300 million deal to develop natural gas resources in the Saudi Arabian Ghawar field. Many say the deal is risky and could deliver little. In October 2004, it made a deal with Iran to help develop the Tadavarn oil field in exchange for Sinopec agreeing to buy millions of tons of Iranian liquified natural gas. One media source estimated the value of the deal at $70 billion.

In 2012, Sinopec partnered with South Africa's national oil company PetroSA to help develop a new greenfields refinery that was subsequently shelved due to high costs. It said it would retain the whole workforce as well as the existing Caltex brand for the retail fuel stations for up to six years before launching a rebranding strategy. In November 2012, Total announced the sale of its 20 percent stake in a Nigerian offshore oilfield to Sinopec for $2.5 billion. The block includes the Usan oilfield, which began producing in February 2012, and is jointly owned with Chevron, Exxon and Canada's Nexen.

In March 2017, Sinopec paid almost $1 billion for a 75 percent stake in Chevron Corp's South African assets and its subsidiary in Botswana to secure its first major refinery in Africa. The assets include a 100,000 barrel-per-day oil refinery in Cape Town, a lubricants plant in Durban as well as 820 petrol stations and other oil storage facilities. [Source: Reuters, Mar 22, 2017]

Sinopec, Corruption and the Communist Party

Sinopec is controlled by and its top management is appointed by the Communist Party. Sinopec Corp is listed on stock exchanges in Hong Kong, New York and London yet 75 Japan of its shares are held by state-owned Sinopec Group in Beijing. It is often presented as an example of the “China model,” an economic order that often looks capitalist but is controlled by — and designed to serve — the Communist Party. Management decisions are announced not by its board of directors but by the Communist Party’s Organization Department, a secretive body responsible for most top appointments in business, government, academia and media.[Source: Andrew Higgins, Washington Post, May 6, 2011]

Andrew Higgins wrote in the Washington Post, “Sinopec’s connections and wealth ensure that it faces little competition and enjoys easy access to credit from state-owned banks. But they also make it a target for public outrage, and a symbol of a system riddled with corruption by politically connected insiders. The company’s financial interests also sometimes clash with its political loyalties. Dependent on imported oil to feed its refineries, Sinopec loses money unless it passes on the global market’s rising prices to Chinese consumers. But the state, which regulates gas prices, worries about stoking inflation, which risks fuelling political troubles for the Party.”

Sun Haifeng, an associate professor at Shenzhen University’s School of Communications, told the Washington Post that Sinopec and other big state corporations “don’t operate in the framework of a full market economy but operate in the framework of power. In February 2011 Sun helped expose a ruse in which, amid mounting public anger over the cost of fuel, Sinopec asked staff to write Internet messages and blogs under false identities in order to “create a positive opinion environment” for higher prices, according to a leaked internal document issued by the company’s “Party Committee Work Bureau.” It promised prizes for the best 20 fake messages. For his indiscretion Sun said was called in “for tea” by the “relevant departments,” Chinese code for a questioning by security police. His post got deleted.

Sinopec has been dogged for years by corruption. Its former chairman, Chen Tonghai, took bribes totaling over $28 million. His mistress testified against him as did former colleagues, who told how he used to claim nearly $6,000 a day from Sinopec for personal expenses. In July 2009, Chen was given a suspended death sentence after being found guilty of engaging in corrupt practices.

Sinopec Wine Scandal

Sinopec was widely criticized for its purchase of 1,176 bottles of Chateau Lafite Rothschild 1996 for $1,813, and several bottles of high-end Moutai for $125,510 in company cash, with the total bill $245,000. The scandal occurred at a time of rising public anger over high gas prices and has been a for the ruling Communist Party, which controls the oil giant and appoints its top management, and has reinforced a widespread belief that big state-owned corporations serve the interests — and lavish lifestyles — of a tiny group of insiders. [Source: Andrew Higgins, Washington Post, May 6, 2011]

Chinese netizens had a field day with Sinopec’s claims that a lone, wayward executive — Lu Guangyu — is to blame — and has now coughed up for wine already drunk. “Is Sinopec an oil company or a wine merchant?” fumed a Chinese commentator on a Web forum dedicated to discussion of the scandal. “Embezzling public money is a crime, but public security (police) has done nothing.” The story came to light in April 2011 when apparently disgruntled employees posted a few invoices that detailed Sinopec’s expensive wine purchases on Tianya, a popular Chinese internet forum. Andrew Higgins wrote in the Washington Post: “They showed that in just a few days last September, Sinopec’s branch in Guangdong, China’s most populous and wealthiest province, purchased hundreds of bottles of Chateau Lafite Bordeaux — some costing $2,100 each — and of Maotai, a fiery Chinese liquor served at banquets.

Furor ensued, and eventually it became clear that the full bill was larger; a quarter million dollars in high-end booze was unaccounted for. At a press conference last week, Sinopec promptly hurled Lu under the bus, and declared the matter settled. Three days after the alcohol purchases became public, Chinese gas prices rose to their highest ever level. A gallon of premium fuel now costs around $5 in Beijing. “How can the price of gas not go up when they indulge in such extreme luxury?” asked an angry online commentary by the person who posted the invoices under a pseudonym.

“Sinopec’s branch in Guangdong confirmed the authenticity of the invoices but initially denied any wrongdoing,describing its alcohol deals as part of the company’s “normal operations.” CCTV, China’s main state-run television network, meanwhile reported that Sinopec’s Guangdong managers had launched a hunt for the “internal ghost,” or whistleblower, responsible for leaking the purchase documents.” As the furor grew, Sinopec’s corporate headquarters in Beijing stepped in with its own effort at damage control: It held a meeting to trumpet the company’s austere ways. A worker in the corporate canteen told how Sinopec is so thrifty, it serves braised radishes and onion leaves. Another staffer hailed the memory of “Iron Man Wang,” an abstemious model oil worker feted by Mao Zedong, who died in 1976. The exercise attracted ridicule. Critics lampooned Sinopec on the Internet by posting cartoons of radishes.” In an effort to calm the crisis, Sinopec’s management called Chinese journalists to a meeting in Beijing. Higgins wrote: “They provided details of an internal investigation and pinned all the blame for the wine affair on the head of the Guangdong branch.

Could Somebody Really Drink $245,000 Worth of Wine and Expensive Maotai

Evan Osnos wrote in the The New Yorker: “Did Lu Guangyu, the general manager of Sinopec’s Guangdong branch, really drain 480 bottles of vintage Moutai and 696 bottles of red wine” That’s exactly what his employer says, and it’s sticking to it. Leaving aside the problem of outing an employee by name for an ostensibly epic substance-abuse problem, a few questions remained, and the Chinese press deserves credit for asking them. As the Global Times put it in an investigative piece credited to Li Xiang and Zhang Han: “The price of Moutai has risen quickly in the past two months, with a hike of around 350 yuan ($53.73) a bottle since Spring Festival, making it unaffordable for ordinary people. Some insiders believe that the price is actually an index for China’s corruption.” [Source: Evan Osnos, The New Yorker, May 10, 2011]

“An index, indeed. The reporters spoke to four Sinopec employees, one of whom said: Most of the luxury liquor Lu bought was used to bribe local authorities, as Sinopec’s expansion strategies, such as opening new gas stations, preferential policies on transportation and tax, and even paying people off to overlook pollution, all require a benign connection with local authorities ... Keeping this “fragile” connection going is paid for through gifts. In other words, bribes.”

As Li and Zhang found: “All four interviewees working at Sinopec contacted by the Global Times said that huge spending on alcohol is omnipresent. "At every festival, giving gifts, especially costly ones, to your leaders who have been taking good care of you is a backdoor form of etiquette known to all, so a small part of the alcohol can be found in the drink cabinets of Sinopec’s top leaders,” an accountant working at Sinopec Yangzi Petrochemical Company Ltd told the Global Times anonymously.

So, what of old Lu Guangyu, whose name has been drenched in ignominy in all this? Perhaps he did have a sip or two, but a quarter million dollars’ worth seems ambitious. As a Sinopec employee explains: “Lu could certainly never consume this astonishing amount of luxury alcohol by himself, given he’s in his late 50s and about to retire.” If that’s a reason not to doubt him, it makes me wonder what the younger staff is up to.


China National Offshore Oil Corporation (CNOOC) is China’s third largest oil producer and oil company. Founded in 1982 and headquartered in Beijing, it earned $83 billion in revenue in 2021 and ranking No. 92 spot on Fortune's Global 500 companies list in 2021. In the 2000s, the company was based in Hong Kong and publicly traded in Hong Kong and New York but was 70 percent owned by the a state-owned entity. At that time CNOOC was more profitable than Sinopec and PetroChina because it was not bogged down with refining costs. [Source: Investopedia]

CNOOC Financial Data
Revenue: US$106 billion in 2018
Net income: US$7.9 billion in 2014

Total assets: US$167 billion in 2014
Total equity: US$69 billion in 2014 [Source: Wikipedia]

CNOOC is headed by Chairman Wang Yilin and CEO Li Fanrong. It had 98,750 employees in 2011. CNOOC was headed by Fu Chengyu, who grew up in Heilongjiang and once said his family was so poor he had to barter eggs for schoolbooks. He graduated from Daqing Petroleum Institute in Heilongjiang in 1975 with a degree in geology and worked as field engineer in China for seven years. He studied at UCLA and became CNOOC’s chief operating officer in 1999 and chairman in 2003.

As of 2005, William Blair & Co., an $11 billion money management firm in Chicago, was the largest non-government share holder in CNOOC. It sold its shares when CNOOC began its efforts to purchase Unocal, saying the CNOOC was putting the interests of China ahead of those of its shareholders.

CNOOC aims to be a key supplier of liquified natural gas to China. CNOOC controls fields off the east coast of China in Bohai Bay and other places. In the early 2000s, it announced it was going to spend $700 million on pipelines and gas fields in the South China Sea to supply gas to Macau and the Guangdong Province via the city of Zhuhai.

Like other giant energy companies in China, CNOOC, pursues profit but is ultimately answerable to the party, whose secretive Organization Department appoints its boss. The oil corporation is listed on the Hong Kong stock exchange, but a state-owned parent company in Beijing holds a majority of its shares — and makes all key decisions. This adds a layer of hidden calculation to what, in companies driven only by the bottom line, would be a straightforward and relatively predictable business agenda.

CNOOC Deals and Acquisition

In 2002, CNOOC became the largest offshore producer in Indonesia when it bought a stake from the Spanish company Repsol. It also signed a $12 billion, 25-year contract to purchase liquified natural gas from Australia’s Northwest Shelf project.

In 2013, CNOOC bought and took over the Canadian oil and gas company Nexen for $15.1 billion after a contentious, seven month battle. It was r China's largest-ever foreign takeover. The acquisition of Nexen, based in Calgary, Alberta, gives CNOOC new offshore production in the North Sea, the Gulf of Mexico and off western Africa, as well as producing properties in the Middle East and Canada. In Canada, CNOOC gains control of Nexen's Long Lake oil sands project in the oil-rich Alberta, as well as billions of barrels of reserves in the world's third-largest crude storehouse — the oil sands of Alberta. [Source: Euan Rocha, February 25, 2013]

CNOOC’s Effort to Buy Unocal

In the 2005, CNOOC tried to buy Unocal, the 8th largest oil company in the United States. It was the largest takeover ever attempted by a Chinese company and was supported by China’s state-owned banks, powerful Washington lobbyists and the powerfull Wall Street investment banks Goldman Sachs and J.P. Morgan.

CNOOC and Unocal are partners in offshore drilling in China. In June 2005, CNOOC offered to pay $18.5 billion for Unocal in cash. It dropped its bid due to political pressures from Washington. Instead Unocal was bought by Chevron, the second largest oil company in the United States, for $17.1 billion in cash and stock deal — a considerably lower price than what CNOOC offered.

Unocal spokesman said the company accepted the Chevron offer over the more lucrative CNOOC bid because the CNOOC bid was too politically risky and CNOOC failed to offer adequate compensation guarantees if the deal failed to go through for political reasons. Beijing’s response to the rebuke was relatively mild.

The CNOOC-Unocal deal failed because of political opposition to it in the United States. The U.S. House of Representatives passed a resolution 398 to 15 that expressed concerns over the deal because of national security interests even though it only involved 0.8 percent of the U.S.’s oil production.

The Chinese were unhappy because they were unable to secure an important source of oil. Stockholders with Unocal were disappointed because they could have gotten more money from CNOOC deal. People in the American oil industry and the entire American business community were not pleased either. They worried that the same argument could used against them if were to invest in oil fields in another country. The only people that were really happy were politician who scored political points and Chevron which obtained Unocal for a cheaper price than it otherwise might have had to pay, plus it desperately needed Unocal to remain a global oil player.

Objections to the CNOOC deal are particularly unfair because Saudi Arabia, Venezuela, Russia, France, Brazil, Norway and Venezuela have all made major acquisitions in the U.S. oil and gas sector. Venezuela bought Citgo, which hold oil supplies vulnerable to disruption that can negatively effect the U.S. economy. By contrast Unocal has only modest operations in the United States. Only a quarter of its reserves are in the United States (around 70 percent of Unocal’s reserves are in Asia and not geopolitically vital to U.S. interests). CNOOC is expected to continue to aggressively try to obtain oversees energy assets.

Chinese Oil Companies Abroad

Chinese oil companies want a piece of the action and share in the development and profits of oil fields rather than just being buyers. These companies are willing to pay top dollar —some think overpay — for oil assets, in part because they are supported and financed by the government who are willing to do almost anything to secure reliable energy sources.

According to Associated Press: Total acquisitions by Chinese energy firms jumped from less than $2 billion between 2002 and 2003 to nearly $48 billion in 2009 and 2010, according to the International Energy Agency. More times than not, the companies are paying above the industry average to get those deals done. [Source: Chris Kahn, Associated Press, March 29, 2012]

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

Last updated June 2022

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