China oil majors in dash for overseas oil, gas [Sudan Watch]

SINGAPORE, Oct 16 (Reuters) - Faced with declining domestic oil output and growing dependence on imported crude, China's state oil firms have made an impressive foray this year beyond Chinese borders to hunt for oil and gas.

China's three oil majors -- Sinopec, CNOOC and PetroChina -- have extended their reach from the homeland to eye upstream stakes in the Middle East, north and west Africa, southeast Asia, Russian and Central Asia.

But the march abroad is not limited to oil. Gas is also high priority for some firms as China seeks to reduce dependence on crude oil and move to alternative energy sources.

"With domestic reserves falling and millions of workers in the drilling and production sectors waiting to be fed, foreign expansion has become an essential component for corporate development," said Zhu Xinshan, research fellow at the Energy Research Institute (ERI), a government energy think-tank.

Beijing began calling for overseas exploration in the mid-1990s when the world's most populous country became a net oil importer.

CNPC, parent of PetroChina <0857.HK> and the largest domestic oil producer, was the sole company charged to lift China's overseas activities.

But few advances were made until this year when Premier Zhu Rongji reiterated the call in March, shortly after China launched all three state oil companies into the global capital markets.

The most prominent deal in 2001 was struck by offshore monopoly CNOOC Ltd <0883.HK> , when it made a preliminary agreement with Chevron Australia in August to acquire a stake in Australia's largest gas find Gorgon.

Chinese officials say the state firms are united in their goal to reduce China's import dependence, but each has a different strategy to achieve the target.

CNOOC, which has positioned itself as leader of China's liquefied natural gas (LNG) sector, targets mostly gas assests.

"As China is boosting gas use to replace depleting and polluting oil, CNOOC will focus its overseas efforts on gas," CNOOC's investment relation official Xiao Zongwei said.

CNOOC's attempt to get a foothold in the Australian gas market is linked with its ambitions to build up to three LNG import terminals along China's east coast in the next 10 years.

CNOOC is the leading shareholder with 33 percent in China's first LNG terminal in the southern province of Guangdong.

China's top refiner, Sinopec <0386.HK> , will concentrate on increasing equity oil production as it imports 60 percent of the crude it processes.

"To us, crude ranks number one. Our management is fully aware of the importance of crude reserves for Sinopec and has pledged a substantial budget for that," a senior Sinopec exploration official told Reuters from Beijing.

Though a fledgling entrant, Sinopec made aggressive headway in the last 12 months in the Middle East, where domestic rival CNPC has failed to reap any deals in the last six years.

Already armed with service contracts in Iran and a production sharing contract in Yemen, Sinopec is now eyeing Kuwait's giant northern fields in what could be China's largest foreign upstream investment, the official said.

The official said Sinopec hoped to participate in the $7 billion development project to double output in Kuwait's northern fields to 900,000 barrels per day in 2005 pending approval from the Kuwaiti parliament.

PetroChina recently formed its own overseas exploration and production arm, a parallel entity to its parent's international unit, which has equity oil output in Sudan.

ERI's Zhu said PetroChina's move abroad reflected mounting pressure to replace reserves as well as finding new jobs for skilled oil workers when domestic output slumps at the giant onshore Daqing field in about five years.

"Where shall the thousands of oil workers at Daqing go once the output starts to tumble?" Zhu said.

Industry officials said PetroChina was likely to target investment in Russia's East Siberian fields, which are planned to be linked to a 2,400-km pipeline to move Siberian oil to Beijing from 2005 onwards.

"...The official said Sinopec hoped to participate in the $7 billion development project to double output in Kuwait's northern fields to 900,000 barrels per day in 2005 pending approval from the Kuwaiti parliament..."

With Russia doing their best impersonation of Turkey circa 1917 China is just biding their time until they can make their move on Siberia. Don't be surprised if their is increasing "unrest" amongst ethnic Asians in eastern Siberia. China and N. Korea may use this as an excuse to make a move on the wealth of Siberia and establish a puppet regime their. </ predictions>

You may be right, but I think Tom Clancy pretty much called the future on that scenario.

After all, if Debt of Honor (747 terrorist cruise missile) happened 9/11, Executive Orders is ongoing (bio-war attack against US), can the other two Sum of All Fears (nuclear terrorism) and The Bear and the Dragon (you above mentioned scenario) be too far off ?

TC seems to just put 2 + 2 together.... for about 600 pages. I expect more incidents because we are now calling the T's hand.

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