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China is on oil and gas shopping spree

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HONG KONG – Deep-pocketed Chinese energy firms have started to flex their muscles. They are snapping up foreign oil and gas companies at an increasing clip.

Of the 10 biggest foreign mergers or acquisitions by Chinese companies this year, seven have been in the energy sector, according to data from Dealogic.

The targets range is widely in their geography. The state-owned China National Petrochemical Corporation has invested almost $10 billion in 2013 in oil and gas fields in Mozambique and Kazakhstan. Another state-owned company, Sinopec (SHI), spent $3.1 billion on a 33% stake in Apache’s (APA, Fortune 500) Egypt fields.

China is on oil and gas shopping spreeSo far in 2013, over 20% of oil and gas deals globally have involved a Chinese firm, said Brian Lidsky, a managing director at Houston-based data provider PLS Inc. That’s a record for China.

The same trend was on display in 2012, capped by the blockbuster $15 billion purchase of by Canada’s Nexen by China National Offshore Oil Corporation (CEO) — a big play for oil sand and shale gas.

Analysts say the emphasis on the energy sector can be attributed to China’s shift away from coal and a domestic shortfall in energy production. Companies need to look beyond China’s borders for resources.

The move abroad has not always been smooth. The state-owned CNOOC, for example, was forced to abandon an $18 billion bid for California-based Unocal in 2005 amid heavy political pressure in the United States. Since then, Chinese firms have largely shied away from wholesale purchases of U.S. companies.

Yet Chinese firms have also benefited from large-scale changes in the oil industry. In recent years, American companies have focused more on the shale gas boom in North America, opening the door for Chinese firms in countries like Iraq, Mozambique and Egypt.

In Iraq, Exxon Mobil (XOM, Fortune 500), BP (BP), Royal Dutch Shell (RDSA) and other international oil firms haven’t been more aggressive in bidding for contracts because the terms are pretty lousy.

But Chinese oil companies have been willing to pick up the slack — signing deals in which royalties, taxes and other fees typically take 90% or more of a firm’s profit.

There are few reasons to think China’s interest in the energy sector will subside. China is the most populous country on earth with 1.3 billion citizens. It already consumes more oil than any other country save the United States. And it’s set to soon surpass the United States as the world’s largest oil importer.

The country is also rapidly urbanizing, with hundreds of millions of Chinese moving from rural areas to the cities. China is also adding millions of cars to the roads each year, a trend that only adds to demand for oil-based products.

– CNN MONEY

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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.

The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.

The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.

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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.

The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.

This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.

These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.

The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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By Yemie Adeoye

NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.

The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”

The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.

“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.

Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.

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ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.

Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”

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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.

Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.

We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.

“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.

On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.

 

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