China National Petroleum Corp (CNPC), Asia’s largest oil producer, is reassessing its global strategy to reignite dealmaking, focusing on gas liquefaction and deep-sea drilling, as well as enhancing production from aging wells. The company faces stagnant domestic oil output and a lack of new projects to boost reserves, compounded by slowing economic growth and rising electric vehicle usage, which are diminishing domestic demand.
Lu Ruquan, director of CNPC’s Economics and Technology Research Institute (ETRI), indicated that CNPC might return to investing in significant oil and gas assets as an operator, reminiscent of its past acquisitions, such as the $4 billion purchase of PetroKazakhstan and the takeover of Devon Energy’s operations in Indonesia.
This strategic shift marks a potential return to the more aggressive acquisition strategies of the 1990s and 2000s when CNPC expanded into regions like Sudan and Chad. Lu emphasized the necessity for CNPC to pursue global acquisitions to maintain its competitive edge, stating, “One needs to paddle harder, or else it will retreat backward.”
With PetroChina holding $37.5 billion in cash equivalents in 2023, CNPC has the financial capacity to significantly impact the oil and gas deal landscape. The company is looking to expand its liquefied natural gas (LNG) investments in Qatar, following a recent deal that linked a stake in QatarEnergy’s gas liquefaction plants with a multi-year offtake agreement.
Additionally, CNPC is exploring opportunities in South American deep-sea acreage near Guyana, where significant discoveries have been made by China’s CNOOC Ltd in collaboration with Exxon Mobil.