Workers at a CNPC project in Chad. Chinese oil firms have been stepping up their overseas expansion pace in recent years. [Photo Provided to China Daily]

BEIJING, June 30 (Xinhuanet) –Chinese oil companies may find it tough to convert the potential opportunities that may arise when BP Plc decides to divest some of its assets into actual deals, analysts said on Tuesday.

Domestic companies will have to evaluate the deals cautiously if they want to benefit from them, they said.

Cash-rich Chinese oil companies are likely to join the list of potential bidders if BP sells some of its assets to fund the Gulf of Mexico oil spill clean up, said Chen Weidong, chief energy researcher with the energy research institute affiliated to the China National Offshore Oil Corp (Cnooc).

“Domestic companies must study the BP assets carefully,” he said.

The valuation of oil and gas assets is affected by many factors, especially the fluctuating crude prices. Domestic oil companies “should make comprehensive asset evaluations” to benefit from the deals, said Chen.

As there are still a lot of uncertainties, oil companies should be well prepared for the difficulties, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

“Domestic companies will face stiff competition from foreign peers for the valuable BP assets. It may not be an easy race to win,” said Lin.

Although Chinese oil companies have been stepping up their overseas expansion pace in recent years, they still lack the requisite experience and management skills needed for such deals, he said.

PetroChina Co, the listed arm of China National Petroleum Corp (CNPC), would have “persuasive” reasons to seek a takeover of BP, Bloomberg said recently, quoting a Standard Chartered Bank report of June 10.

But political opposition in the West would render impossible such a deal, said analysts.

“Don’t forget the Unocal case. Chinese oil companies will face similar hurdles in overseas deals,” said Lin.

China’s largest offshore oil company Cnooc had in 2005 made a bid to acquire US oil company Unocal for $18.5 billion. The company later withdrew the bid after facing political opposition in the US.

Domestic oil companies led by CNPC and Sinopec have quickened their overseas expansion pace in recent years, a move analysts said was necessary to cope with the rising domestic energy demand.

PetroChina said in May it would invest $60 billion to increase its overseas oil and gas output to 200 million tons every year.

PetroChina’s overseas oil and gas cooperation areas would be focused on Central Asia, the Middle East, Africa, the Americas, and the Asia-Pacific, Jiang Jiemin, chairman of the company, said in May.

According to analysts, domestic oil companies may be more interested in BP assets in regions like the Middle East, Africa and South America, as they have been making efforts to expand business in these regions.

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NEW YORK, June 29 (Xinhua) — The euro fell against the U.S. dollar Tuesday on concerns over the health of the global recovery. The deep cuts in public spending and slowing economies in Europe have drawn investors’ concerns. On Tuesday, the Conference Board said its Consumer Confidence Index fell to 52.9 in June from 62.7 in May. The economic research group also said that its leading economic index for China rose just 0.3 percent in April, the smallest gain since November, suggesting that growth could slow. The euro dropped to 1.2209 dollars in late New York trading Tuesday from 1.2287 dollars late Monday. The British pound declined to 1.5081 dollars from 1.5110 dollars, but the dollar slipped to 88.49 Japanese yen from 89.40 yen. The dollar gained to 1.0550 Canadian dollars from 1.0344 Canadian dollars while dropped to 1.0807 Swiss francs from 1.0875 francs. Related: Gold rebounds amid renewed European debt worries, despite stronger dollar CHICAGO, June 29 (Xinhua) — Gold futures on the COMEX Division of the New York Mercantile Exchange bounced off on Tuesday, as the sharp slide in equity market sparked buying of the precious metal as a safe-haven. Silver and platinum both retreated. The most active gold contract for August delivery advanced 3.8 dollars, or 0.3 percent, to finish at 1,242.4 U.S. dollars. Full story Euro rises against U.S. dollar as worries about Spain ease NEW YORK, June 17 (Xinhua) — The euro rose against the U.S. dollar on Thursday as worries about the country’s debt problems eased. The euro rose against the green back after Spain successfully raised nearly 3.5 billion euros in an auction of 10 and 30 year bonds. Full story

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BAOSTEEL Group plans to raise annual crude steel production capacity by nearly 70 percent over the next five years, the company said yesterday.

China’s second-largest steel mill targets an annual capacity of 50 million tons by 2012 and more than 66 million tons by 2015, compared with 38.9 million tons last year, it said in its next six-year plan posted on its Website.

Rapid output capacity by China’s leading steel makers prompted Baosteel’s ambitious plan. Last year, five Chinese mills were among the top 10 steel makers globally. Baosteel ranked third, following ArcelorMittal and Heibei Iron and Steel Group.

Last week, Anshan Steel Group said it planned to raise its annual crude steel capacity to 60 million tons in the next five years.

However, Anshan Steel projected the Chinese steel industry will face low profitability and slow growth amid severe overcapacity, higher raw material prices, growing competition and rising protectionism.

Baosteel said it will actively seek mergers and acquisitions, explore overseas markets and optimize assets.

“At present, acquisitions are more about enlarging the company size. But the focus will shift to enhancing its cost competitiveness,” the company said.

Baosteel will also step up efforts to secure raw material supplies in resource-rich regions. It is mapping out plans to build manufacturing facilities overseas.

Read more: http://www.shanghaidaily.com/article/?id=441388&type=Business#ixzz0sDzfxWHz

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