The Overseas Activities of China's National Oil Companies: Rationale and Outlook

Abstract

The rapid expansion of the overseas activities of China's national oil companies (NOCs) has been driven by the needs of both government and NOCs, and this partnership has provoked negative reactions in some other oil importing countries. One goal the government and companies share is to acquire overseas production of oil and gas. In the late 1990s China's government worked closely with the NOCs to gain access to projects of strategic importance. Since 2002 the link between the government and the NOCs has loosened perceptively, at least in those countries which lack a strategic significance. The NOCs are behaving more like private sector companies, but still have much to learn, especially with respect to the assessment and evaluation of risk. In the absence of a domestic crisis or a series of commercial failures, it is almost certain that China's NOCs will continue their overseas expansion. Attempts to obstruct this spread may be counter‐productive. Partnership rather than confrontation will prove to be more constructive.

Notes

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2. Ding, J.M. “Decipher the ranking of top 100 tax payers in 2004 (China)”, Xinhua News Agency, 11^th September 2005. www.Xinhuanet.cim/fortune/200509/11/content_342845.htm (in Chinese.)

3. CNPC corporate website: www.cnpc.com.cn