This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

China Outbids Oil Majors in Iraq

Stocks in this article: PTR XOM RDS.A BP CEO

Since 2009, the Iraqi government has conducted two rounds of open bidding to award oil-field development rights to foreign consortia. The total potential daily output from these fields could approach 11 million barrels a day, or represent about 10% of total global production when they're fully developed, Walters estimates.

Of the development rights awarded, Chinese interests, specifically the China National Petroleum Company, (CNPC) were the leading bidder for the Rumaila and Halfaya fields, which represent almost 3.5 million barrels a day of production; or more than one-third of the total production potential from all the fields being auctioned, according to Walters.

"For global supply ... China is expanding the pie by adding product that would otherwise not be in the market today," said Luft of the Institute for the Analysis of Global Security.

Walters added that while many large, Western integrated super majors such as ExxonMobil, Shell (RDS.A - Get Report) and BP (BP - Get Report) were successful bidders as well, only Shell has interests in fields with as much production potential as those that CNPC has.

Other major winners in the Iraq bidding included Petronas of Malaysia, Gazprom of Russia and Lukoil of Russia. Renaissance Capital's Trajkov says recently, PetroChina may have also concluded a deal on Halfaya and Rumaila.

Since the initial awards, CNPC has increased its holdings in Iraq with, for instance, the acquisition of an additional 12% interest in the Rumaila field from BP in late 2009. CNPC also has an interest in the Ahdab field, which is the first, new Iraqi oil field to be brought on stream since the fall of the Saddam Hussein regime in March 2003.

Luft says in total, CNPC and China's Cnooc (CEO) have won at least three major deals in southern and southeastern Iraq and are also bidding for other deals.

"Personally, I find it interesting that the Chinese oil companies are already competing 'shoulder to shoulder' with the Western oil majors after coming onto the scene just in the last five to 10 years," said Platts editor Calvin Lee.

"I don't see it as part of preferential treatment by the Iraqi government, but rather a timid and risk-averse attitude by the IOCs," Luft reiterated. "They just don't want to bite more than they can swallow and need to see a more stable regulatory environment before they take a deeper plunge."

Chinese state-owned Sinopec in 2009 entered Iraqi Kurdistan through the acquisition of Addax Petroleum, but has since met obstacles investing in the rest of Iraq due to the ongoing tension between Iraqi proper and Iraqi Kurdistan.

-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

Copyright 2011 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs