BLOOMBERG: Cnooc, Other Chinese Oil Companies May Lead Oil Mergers: “BG Group Plc, Repsol YPF SA, Woodside Petroleum Ltd. and even Royal Dutch Shell Plc also ``could be in the hands of other players…'': Tuesday 23 August 2005

Aug. 23 (Bloomberg) -- Cnooc Ltd., Petrochina Co. Ltd. and other Chinese oil companies may be back in the takeover hunt to get access to more reserves to meet demand in the country's growing economy, a Foresight Research Solutions energy analyst says.

After the sting of Cnooc failing to prevail in the bidding for Unocal Corp., the company and its Chinese rivals are likely to stay away from U.S., Canadian, Australian and European targets, said Bernard Picchi, an energy analyst for Foresight in New York in a note to investors.

Nationalism in the U.S., Canada, Australia and Europe is likely to block any attempt by a Chinese company to takeover a national energy company. As a result, Chinese companies including China Petroleum & Chemical Corp. and SinoChem International Co. Ltd. may go after companies in countries less tied to the west, he said.

``The Chinese (companies) will search for oil reserves where U.S. and European energy companies are commercially or politically unwelcome, including (but not meant to exclude any oil rich pariah): Iran, Iraq, Myanmar, Sudan and Venezuela,'' said Picchi in the report.

Still, yesterday China National, the nation's biggest oil company, agreed to buy Canada's PetroKazakhstan Inc. for $4.18 billion.

Flush With Cash

Chevron Corp. acquired Unocal two weeks earlier for $17.8 billion, thwarting a rival bid from China's Cnooc that U.S. lawmakers opposed.

Chinese companies also may partner with private equity firms or pursue joint ventures, Picchi said in the report.

``The scars are still fresh from the company's thrashing by Congress,'' he said.

Because the industry is awash in capital, takeovers may winnow the field of oil and gas producers such as Amerada Hess Corp., Marathon Oil Corp. and Occidental Petroleum Corp., said Picchi.

BG Group Plc, Repsol YPF SA, Woodside Petroleum Ltd. and even Royal Dutch Shell Plc also ``could be in the hands of other players,'' he said.

To contact the reporter on this story:

Dan Lonkevich in New York at dlonkevich@bloomberg.net.

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