Power Point Presentation

advertisement
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
THE JOURNALISTS AND EDITORS WORKSHOP
ON LATIN AMERICA’S ENERGY FUTURE
Miami, Florida
May 6, 2011
Simin Yu, LL.B., M.A., J.D.
Senior Associate
Wenya Group
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
The Figures:
1. In 2010 alone, China made US 20bn-worth of oil and gas deals in Latin
America, up from:
zero in 2009;
US$ 1 billion in 2008;
zero in 2007;
US$ 0.43 billion in 2006; and
US$ 1.42 billion in 2005
2. estimated that by 2010, Chinese firms have secured deals in LA worth at
least $65 billion in stakes of various projects.
3. Latin America as a region has supplied around 8-9% of China's total oil
imports in 2010, up from 6-7% in 2009.
4. Chinese companies have spent $24.6bn on overseas oil and gas
acquisitions in 2010, accounting for a fifth of deal activity in the sector over
the period.
The above investments are limited to LA’s oil and gas sector. Source: author’s calculation
Chinese NOC Expansion in Latin America
China’s Investments in Latin America
Unit: US$ million
Source: MOFCOM
China’s Investments in Latin America,
cumulative
Unit: US$ million
Source: MOFCOM
China’s Investments in Latin America,
cumulative
Unit: US$ million
Source: MOFCOM
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
China’s Energy Policy towards LA:
The Chinese government unveiled a policy paper on “Latin
America and the Caribbean” in November, 2008.
The following is what commonly considered as key aspects
of China’s energy policy towards LA:
1. Trade - Further diversify China’s crude oil import
sources.
Sources of China's Crude Oil Imports
Gradual increase of oil imports from Africa, corresponded
with a recent decrease of Middle East crude.
Source: Dow Jones, Reuters
Dominate LAC Trade to China (2009)
Five Countries, Eight Sectors
Source: UN Commodity Trade Statistics
China’s Average Annual Trade Growth, by Key Regional
Partner, 1990 – 2009 (%)
China’s Rank as a Trading Partner for Selected Countries in Latin
America, 2000 and 2008
China’s Import from Latin America: Value and
Percentage of World Total
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
China’s Energy Policy towards LA:
2. Investment - Through government level initiative,
encourage and facilitate China’s NOCs’ involvement in
Latin America’s energy sector.
China’s NOCs in numbers
Estimated Chinese share of overseas
equity in oil exporting countries, Q1 2010
Major Chinese Acquisitions in Latin America
Source: Kevin Gallaher
Major Chinese Acquisitions in Latin America, 2005 - 2010
Source: Heritage Foundation
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Argentina
Acquisition – CNOOC bought a 50% stake in Bridas Corporation in March 2010 for US$ 3.10
billion
•forming the CNOOC / Bridas JV
•financing – CNOOC internal resources
•CNOOC’s first major acquisition in Latin America, giving CNOOC 318 million barrels of reserves –
a 12% increase for CNOOC’s global portfolio
Acquisition – CNOOC / Bridas JV acquired BP’s 60% stake in Pan America Energy in November
2010 for US$ 7.06 billion
•acquisition limited to PAE’s assets in Argentina, excluding its assets in Bolivia
•financing - CNOOC contributed US$ 2.47 billion, Bridas Energy Holdings contributed US$ 2.47
billion, with the remaining US$ 2.12 billion to be satisfied by third party loans to be arranged by
Bridas or additional contribution from CNOOC and BEH
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Argentina
Acquisition – Sinopec acquired Occidental Petroleum’s operations in Argentina in November 2010
for US$ 2.45 billion, closed in February 2011
•the agreement was signed two weeks after CNOOC’s acquisition in PAE
•one month before that, in October 2010, Sinopec signed a US$ 7.10 billion deal to buy 40% of
Repsol SA’s Bazillion assets
•Sinopec’s first investment in Argentina’s upstream oil and gas sector
•Occidental Argentina had gross proven and probable reserves of 393 million barrels of oil
equivalent, and an interest in 23 production and exploration concessions in Santa Cruz, Mendoza
and Chubut provinces in Argentina
•Occidental Argentina’s 2010 production – 15 million BOE and 14 billion cubic feet of natural gas
equivalent
Acquisition (downstream) – PAE, 30% indirectly controlled by CNOOC, agreed in February 2011
to purchase ExxonMobile’s downstream business in Argentina, Uruguay and Paraguay
•PAE currently has no downstream exposure
•PAE will acquire the 87,000 barrel per day (b/d) Campana refinery as well as 500 service stations
in Argentina and a further 220 in Uruguay and Paraguay
•price not officially released, media report at around US$800-850 million
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Brazil
Acquisition – Sinopec acquired 20% stakes in two offshore blocks from Petrobras in April 2010
•Sinopec would take stakes in the BM-PAMA-3 and BM-PAMA-8 blocks in deep waters of the ParaMaranhao basin in northern Brazil
•value of the sale not disclosed
Acquisition – Sinochem acquired a 40% stake in Peregrino field from Norwegian Statoil ASA for
US$ 3.07 billion in May 2010, closed in April 2011
•Sinochem, China’s biggest chemicals trading firm, make its first oil and gas investment in 2003 and
is now operating 12 projects in the Middle East, Asia and Latin America
•The field has an estimated 460 million barrels, operation started in April 2011
•Statoil is to maintain the remaining 60% ownership, as well as the operatorship of the field
•CNOOC was also in the bidding process
Acquisition – Sinopec acquired a 40% stake in Repsol’s Brazil arm for US$ 7.1 billion in October
2010, closed in December 2010
•through new share subscription
•the second-largest overseas purchase by a Chinese company
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Brazil
Oil-for-Loan Deal – China Development Bank agreed to lend US$ 10 billion to Petrobras in April
2009 in exchange for long-term supplies of oil
•Petrobras agreed to sell Sinopec 200,000 barrels of oil per day – roughly a tenth of Petrobras’s
current oil production – from 2010 to 2019
•The oil will be bought at a market price but has the benefit of securing supply to Sinopec
•in April 2011, Petrobras confirmed that it is in talks with China Development Bank for a new loan,
deals yet to be agreed
Gas Pipeline Construction Project –
•GASCAC project - 974-kilometer-long pipelines, work extension in GASENE project, Sinopec’s
largest overseas petroleum engineering project by then, financed by China Development Bank with
US$ 750 million, operation started in 2010
•GASCAV project - 303-kilometer-long pipelines , another part of the GASENE project, commenced
in June 2006 and finished in 2007
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Venezuela
Joint Venture – Sumano Oil Company, CNPC’s JV with PDVSA, awarded exploration rights in the
Sumano field in 2007
•CNPC to take a 40% interest in any commercial production in the block
Joint Venture – CNPC agreed in April 2010 to invest US$ 900 million in another joint venture with
PDVSA, with CNPC holding 10% ownership
•to develop Junin 4 oil block in Orinoco heavy oil basin
•Sinopec owns Junin 8 block
Joint Venture – it is reported in February 2011 that CNOOC will team up with Malaysia's Petronas,
Algeria's Sonatrach, and a Russian consortium to develop offshore natural gas project Mariscal
Sucre
•the project is estimated to hold around 14.7 trillion cubic feet of gas
•PDVSA has spent more than a decade searching for partners to develop its Mariscal Sucre project
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Venezuela
Wide range JV cooperation –
•upstream oil exploration and production – Sinovensa, CNPC holds 40% and PDVSA holds 60%
•Oil Transport JV – CNPC and PDVSA each holds 50%
•downstream oil refinery JV – located in both China and Venezuela, CNPC holds 60% and PDVSA
holds 40%
•rig manufacturing JV – capable of producing eight rigs per year, PDVSA has an 85% stake in the
JV and CNPC 15%
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Venezuela
Loans-for-Oil Deal –
“Long-Term and High Volume Loan” –
•signed in 2010, 10-year, US$ 20 billion credit line with China Development Bank
•to be repaid with future oil shipments
•earmarked for infrastructure projects, housing and agriculture
ICBC Loan –
•signed in 2011, totaling US$ 4 billion, with Industry and Commerce Bank of China
•for housing projects in Venezuela, mostly to address an acute housing shortage in Venezuela
•to be repaid with future oil shipments
Joint Investment Fund –
•set up in 2007 with an initial contribution of US$ 6 billion, (US$4 billion from China, and US$ 2
billion from Venezuela)
•doubled its size to US$ 12 billion in 2008 (same contribution ratio)
•Two previous Chinese installments into the bilateral fund, totaling $8 billion, have been mostly
repaid by Venezuela
•a third round injection in the amount of US$ 4 billion will soon be made by China
Development Bank, agreed in March 2011, for housing project, bringing CDB’s total loans up
to US$ 24 billion
•repaid by crude and oil products
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Colombia
Acquisition – in 2006, Sinopec and ONGC teamed up to buy a 50% stake in Omimex de Colombia
for US4 850 million
•Omimex de Columbia's blocks in Columbia have proven reserves of around 157 million barrels
E&P – CNPC in 2008 formed a consortium with Pluspetrol (Argentine privately-held oil firm) and
KNOC (Korea National Oil Corporation)
•to explore oil in CPE 7 field, located in Llanos, eastern Colombia, which has about 130 oil fields
under production
•KNOC owns a 30 percent stake in the field, while Pluspetrol and CNPC own 40 percent and 30
percent, respectively
Acquisition – Sinochem indirectly acquired the following E&P contracts in Colombia when it
purchased Emerald Energy in 2009
•Matambo Association Contract, Gigante field
•Campo Rico Association Contract, Campo Rico & Vigia Fields
•Fortuna Association Contract
•Maranta E&P Contract
•Ombu E&P Contract
•Helen E&P Contract
•Jacaranda E&P Contract
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Ecuador
Acquisition – in September 2005, Andes Petroleum Corporation, a joint venture of CNPC and
Sinopec (CNPC owns 55%, Sinopec owns 45%), purchased all of Canada-based EnCana’s oil and
pipeline interests in Ecuador for US$ 1.42 billion, closed in February 2006
•Assets acquired in this action include three oil tracts with a crude oil output of 7 200 barrels per
day
•in August 2008, Andes Petroleum signed a new contract with Ecuadorean state oil company
Petroecuador, tripling the Ecuadorean state participation in the production of crude from its two oil
concessions, Blocks 14 and 17. Andes Petroleum will receive a fee for extracting oil in Ecuador
instead of keeping a portion of the crude it produces.
•Andes Petroleum planned to further invest $103.9 million in Ecuador over the next 10 years.
Signing of the following Agreements Not Confirmed:
•2009 - Sinopec’s reported US$ 1.1 billion JV project with state-owned Petroecuador to conduct
E&P in Ishpingo-Tiputini-Tambococha, ITT oil field
•2010 - Sinopec’s reported US$ 500 million investment in Ecuador’s Olgan block
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Ecuador
Prepayment-for-Oil Deal – CNPC’s publicly listed arm, PetroChina, signed the agreement with
Petrocuador in February 2011
•Under the new two-year agreement, Ecuador received US$1 billion from PetroChina as
“prepayment” in full for 69 million barrels of crude, which it will begin to ship to China this August
•This agreement is an update to the 2009 contract signed, which will expire July 2011, Ecuador
received its first $US 1billion through its loans-for-oil deal with China in 2009, following Ecuador’s
US$ 3.2 billion bonds default in 2008.
•The new 2011 payment will be used to finance investment project already budgeted for 2011, in
addition, the money will be invested in Petroecuador's Strategic Operational Plan and will help pay
off the company's prior debts.
•The contract does not entail an oil prepayment as do regular contracts, since the Ecuadorian state
will have to pay an interest rate of 7%, higher than the ones typically offered by IMF or World Bank
•It is said to be a Loans-for-Oil deal in guise – a money loan from China, guaranteed with petroleum
and including the payment of interests
Loan for hydroelectric plant and other public projects
•not loans-for-oil deal
•US$ 1.68 billion from China Eximbank, carrying a 6.9% interest rate, signed in 2010, for
construction of the Coca Codo Sinclair hydroelectric dam
•Additional US$ 1 billion, also signed in 2010, energy, oil and telecommunications projects
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Cuba
Framework Agreement with CNPC –
•signed in 2008, no details have been outlined in the agreement
•on expanded cooperation in engineering services, oil equipment and joint exploration of Cuba’s
offshore oil and gas fields
Production Sharing Agreement with Sinopec –
•signed in 2005
•between Sinopec’s unit Shengli Oilfield Administration Bureau and Cupet
•explore Block 3 in the northern part of Pinar Del Rio province and covers 1700 square kilometres
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Peru
Sinochem –
•Emerald Energy, bought by Sinochem in 2009 and now its wholly owned subsidiary, won
exploration contracts in five blocks offered by PeruPetro in November 2010
CNPC –
•Block 6/7 project in Talara Oilfield - the first overseas oilfield development project CNPC operated,
taken over by CNPC in January 1994 and October 1995 respectively
•Blocks 8 and 1 A/B – CNPC acquired a 45% stake from Argentine PLUSPETROL’s Peruvian oil
fields in 2003, making CNPC the second largest oil producer in Peru after Pluspetrol
•Block 111 and Block 113 in the MDD basin – CNPC signed these two risk exploration contracts
with Peru in 2005
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Bolivia
Energy-related Loan –
•Bolivian government borrowed US$ 60 million from China’s central bank in 2009 for completing its
domestic gas networks and purchase of two drilling rigs.
Framework Agreement –
•In September 2005, China's Shengli International Petroleum Development Co. Ltd. signs a
framework pact with state-run Yacimientos Petroliferos Fiscales Bolovianos to invest $1.5 billion
over 40 years in Bolivia's onshore oil and gas sector.
•There are no follow-ups being reported
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Costa Rica
Refinery Projects –
•CNPC invested US$ 1 billion in a JV with Costa Rica’s state-run Recope for a refinery upgrading
project in 2008;
•CNPC is planning a US$ 5 billion investment to build a new refinery there, aimed to provide fuels
through the region and its neighbors from Costa Rica
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Uruguay
Acquisition (downstream) – PAE, 30% indirectly controlled by CNOOC, agreed in February 2011
to purchase ExxonMobile’s downstream business in Argentina, Uruguay and Paraguay
•PAE currently has no downstream exposure
•PAE will acquire the 87,000 barrel per day (b/d) Campana refinery as well as 500 service stations
in Argentina and a further 220 in Uruguay and Paraguay
•price not officially released, media report at around US$800-850 million
•its assets in Bolivia
•financing - CNOOC contributed US$ 2.47 billion, Bridas Energy Holdings contributed US$ 2.47
billion, with the remaining US$ 2.12 billion to be satisfied by third party loans to be arranged by
Bridas or additional contribution from CNOOC and BEH
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Paraguay
Acquisition (downstream) – PAE, 30% indirectly controlled by CNOOC, agreed in February 2011
to purchase ExxonMobile’s downstream business in Argentina, Uruguay and Paraguay
•PAE currently has no downstream exposure
•PAE will acquire the 87,000 barrel per day (b/d) Campana refinery as well as 500 service stations
in Argentina and a further 220 in Uruguay and Paraguay
•price not officially released, media report at around US$800-850 million
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Trinidad & Tobago
Acquisition – Sinopec acquired Canadian oil company Taliman’s local assets in 2009,
through its subsidiary SOOGL Antilles (Trinidad) Ltd (SOOGL stands for Sinopec
Offshore Oil and Gas Ltd.)
purchased assets portfolio
•a 25% non-operating interest in the Angostura development area of block 2(c)
•a 36% interest in the block 2(c) Howler assessment area
•a 26% interest in the Greater Ruby-Delaware appraisal area of block 3(a)
•a 40% interest in the exploration area of block 3(a)
•a 65% operating interest in the onshore East Brighton block
net total proved reserves in Trinidad & Tobago –6.23 billion cubic meter of natural gas
and 4.3 million barrels of oil and NGLs
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Major Chinese approaches to energy & resources:
I. Long term contract + negotiation of price
II. Investing in equity at company level
III. Investing in specific project / asset
IV. Loans-for-Oil Deals
V. Cooperation with other multinational companies
VI. buying other IOC’s local assets
VII. Joint Development Model
Source: author’s calculation
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
Interpreting Chinese NOCs’ Strong Interests in LA:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
LA has vast reserves that are concentrated
geographically;
Recent new oil discoveries in Latin America;
China has a real need to secure long term supply of oil;
Less competition with other IOCs;
China has a longer-term horizon;
Despite their deep pockets, Chinese NOCs have mostly been
unwelcome in other parts of the world;
To diversify imports;
A number of LA countries are cash-strapped;
Many LA countries in favour of like-minded state-owned
national oil companies for E&P join ventures;
ICOs in the region willing to sell assets;
A change of pace by Chinese resource companies over the
past two years in terms of acquisition activity;
Chinese firms will seek to establish more consumer bases
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
A Few Observations:
-
Geopolitical Considerations
How importance of Latin America for China’s energy security?
-
-
Drastic Increase in Crude Imports?
Investment Boom expected to continue?
Chinese NOCs’ Challenge - Policy Uncertainty,
Regulatory Framework, Social Risks, Intense Market Competition,
Environmental Clauses, Transportation Costs, Technology of refinery
CHINA’S ENERGY POLICY TOWARDS LATIN AMERICA
THANK YOU
Simin Yu, LL.B., M.A., J.D.
Senior Associate
Wenya Group
Email: syu@ualberta.ca
Download