Bharat Book Bureau

Asian NOCs will play a major role in global M&A activities


Source: Bharat Book Bureau

This report analyzes the Asian National Oil Companies (NOCs) in respect of their aggressive overseas acquisitions to secure future energy supplies for the domestic country. The report details the current structure of Asia’s energy sector, discussing the reserves, production and consumption trends during 2000-2008 and providing expected crude oil and natural gas production and consumption forecast till 2020. The report details the growth of Asian NOCs in terms of overall reserves and production and also the increase in international operations. It also discusses the role of Asian NOCs in the global M&A industry, detailing the major investments in each region across the globe. Major growth strategies of the Asian NOCs are also discussed. A comparison of the major Asian NOCs against the big five IOCs, in terms of various operational parameters is also provided. The role of national governments in the internationalization of these NOCs is also discussed. The report provides the major future challenges and planned investments by Asian NOCs during 2010-2015. ( )

The Increasing Oil and Natural Gas Demand In Asia Will Continue To Drive The Asian National Oil Companies To Expand Internationally. The Asian region has witnessed a huge increase in crude oil and natural gas demand over the past years. The crude oil consumption in the region increased at AAGR of 2.3% during 2000-2008 and natural gas demand increased at an AAGR of 6.8%. During 2009-2020, the demand in the region is expected to continue to increase at a steady pace with crude oil demand increasing at an AAGR of 2.5% and natural gas at an AAGR of 4.5%.

The rapidly growing demand and only a slight increase in production will lead to an increased dependence on imports. The region’s dependence on crude oil imports is expected to increase from approximately 70% in 2008 to approximately 76% in 2020. The dependence on imports for natural gas supplies is expected to rise significantly from 5% in 2008 to 20% in 2020.

International Assets Will Play A Prominent Role In Asian National Oil Companies Future Operations
The aggressive acquisitions of the Asian national oil companies over the past years have strengthen these companies’ operations internationally. All major Asian NOCs have E&P operations across the globe with CNPC leading the group with operations across 27 different countries globally. The Asian NOCs have fast expanded their international operations over the past years. Currently, the foreign operations account for a major share of overall operations of these companies. The share of foreign reserves in the Asian NOCs total reserves ranges from 16% to 34%. The share of production ranges from 12% to 35%. With increased interest in foreign acquisitions and a large share of international assets in their overall portfolio, the international operations of these NOCs are expected to witness a steady growth.

The Asian NOCs Will Play A Major Role In Global M&A Activities
The Asian NOCs have been aggressively investing in acquiring oil and gas assets globally. The Asian national oil companies spent over $48.8 billion during 2005-2009 in different M&A and asset transaction deals. The Chinese NOCs have been the most aggressive acquirers over the past years, together spending almost $26.6 billion to acquire properties abroad, followed by Korea National Oil Company which spent over $10.5 billion. The Chinese NOCs have been aggressively acquiring oil and gas assets over the past two years, spending $17.8 billion during the period. The companies have invested across the globe acquiring various smaller companies and also oil and gas assets. The growing need to secure the domestic demand will continue to drive these NOCs to look for further acquisition opportunities and play a major role in the global M&A activities.

Chinese National Oil Companies: Securing Future Natural Gas Demand
The expected increase in natural gas demand in China has forced the Chinese national oil companies to look for extended sources of natural gas supplies to the country. In terms of securing long term LNG contracts, the Chinese national oil companies, especially Petrochina and CNOOC have signed various contracts to secure their natural gas supplies. By 2014, Chinese national oil companies will have 20.45 MMTPA of secured natural gas supplies through different LNG contracts. The Chinese national oil companies have also entered into various pipeline projects in order to increase natural gas supplies to China. The important planned gas pipelines are Myanmar- China Gas Pipeline and China Central Asia gas pipeline.

The Aggressive Growth Plans Of The Asian NOCs Will Make Them Major Spenders In 2010
The Asian national oil companies will continue to play a major role in world E&P industry. The major Asian national oil companies are together expected to spend approximately $100 billion in 2010 in order to support their rapid growth strategies. The Chinese companies will account for major part of this increase, accounting for approximately 67% of the total Asian NOCs’ capex.

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