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China is sourcing more energy overseas. Photo: Bloomberg
PetroChina
has agreed to pay US$1.63 billion for a minority stake in a
controversial Australian liquefied natural gas (LNG) project, as it
steps up efforts to source more of its energy overseas.
Mining and energy giant BHP Billiton said it would sell PetroChina its share of the Browse project, estimated to cost US$30 billion to build, after deeming it a "non-strategic" asset.
China's state-owned energy giants have been bidding aggressively for foreign oil and gas fields as Beijing looks to secure future energy supplies to meet rising demand as its economy expands.
The Browse stake marks PetroChina's first major acquisition this year after it set aside US$16 billion for investment as part of a plan to have half its production outside China within eight years.
"PetroChina is under pressure to grow its overseas output," a source familiar with the company's strategy said. PetroChina could not be reached for immediate comment.
The Browse project has been plagued by controversy over its proposed location at James Price Point on the northwestern coast of Australia, which has been opposed by some project partners, environmentalists and Aboriginal landowners.
The investment also comes against a backdrop of soaring costs for some LNG export projects under construction in Australia, owing to labour shortages, construction challenges and the strength of the Australian dollar. Chevron last week revised up the cost of its Gorgon LNG export complex by US$15 billion to US$52 billion.
"For [PetroChina], obviously that particular country probably is not just worrying about the next couple of years. They've got a long-term requirement for energy," said David Lennox, an analyst for Fat Prophets in Sydney.
"You'll find a lot of Chinese companies are stepping into the operational phases of projects like this to learn the trade," he added. "Possibly they can take those skills back."
The sale hinges on the remaining joint venture partners - Woodside Petroleum, Royal Dutch Shell, BP, Mitsui & Co and Mitsubishi - choosing not to exercise rights to match the offer from PetroChina.
BHP said it expected the deal to close in the first half of next year, pending regulatory approvals. The Browse deal follows Canada's approval of China's biggest overseas energy acquisition, a US$15.1 billion takeover by state-owned CNOOC of Canadian oil and gas producer Nexen.
Mining and energy giant BHP Billiton said it would sell PetroChina its share of the Browse project, estimated to cost US$30 billion to build, after deeming it a "non-strategic" asset.
China's state-owned energy giants have been bidding aggressively for foreign oil and gas fields as Beijing looks to secure future energy supplies to meet rising demand as its economy expands.
The Browse stake marks PetroChina's first major acquisition this year after it set aside US$16 billion for investment as part of a plan to have half its production outside China within eight years.
"PetroChina is under pressure to grow its overseas output," a source familiar with the company's strategy said. PetroChina could not be reached for immediate comment.
The Browse project has been plagued by controversy over its proposed location at James Price Point on the northwestern coast of Australia, which has been opposed by some project partners, environmentalists and Aboriginal landowners.
The investment also comes against a backdrop of soaring costs for some LNG export projects under construction in Australia, owing to labour shortages, construction challenges and the strength of the Australian dollar. Chevron last week revised up the cost of its Gorgon LNG export complex by US$15 billion to US$52 billion.
"For [PetroChina], obviously that particular country probably is not just worrying about the next couple of years. They've got a long-term requirement for energy," said David Lennox, an analyst for Fat Prophets in Sydney.
"You'll find a lot of Chinese companies are stepping into the operational phases of projects like this to learn the trade," he added. "Possibly they can take those skills back."
The sale hinges on the remaining joint venture partners - Woodside Petroleum, Royal Dutch Shell, BP, Mitsui & Co and Mitsubishi - choosing not to exercise rights to match the offer from PetroChina.
BHP said it expected the deal to close in the first half of next year, pending regulatory approvals. The Browse deal follows Canada's approval of China's biggest overseas energy acquisition, a US$15.1 billion takeover by state-owned CNOOC of Canadian oil and gas producer Nexen.
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