Asian Giants Engage in High-Stakes Energy Battle

Strategic Insights -

A joint venture between China National Petroleum Corporation and PetroChina is offering $3.2 billion to acquire PetroKazakhstan, a Canadian company with oil fields in Kazakhstan. This bid is in direct competition with a reported $3.6 billion offer from India's Oil and Natural Gas Corporation, in partnership with Mittal Group. The rival bids underscore the intense competition between China and India for energy resources, as both countries vie for oil and natural gas to fuel their growing economies.

Key Takeaways:

  • China National Petroleum Corporation and PetroChina have offered $3.2 billion to acquire PetroKazakhstan, a Canadian company with oil fields in Kazakhstan.
  • The bid is in direct competition with a reported $3.6 billion offer from India's Oil and Natural Gas Corporation, in partnership with Mittal Group.
  • PetroKazakhstan has received proposals to acquire the entire company, with the Chinese bid appearing lower than the Indian bid.
  • Chevron's successful pursuit of Unocal this summer has shown that the higher bid does not always win in the energy industry.
  • China's alliance with Kazakhstan might be able to smooth over PetroKazakhstan's bitter disputes with the Kazakh government.
  • An Indian buyer of PetroKazakhstan would face a more difficult challenge in exporting oil from Kazakhstan, which does not share a border with India.
  • Oil experts believe that an Indian buyer might need to export the oil through Russia, further increasing Kazakhstan's dependence on Russia.
  • The rival bids underscore the inherent competition between China and India for oil, even though both countries' senior officials have called for cooperation.
  • India's oil imports rose 11 percent last year, while China's soared 33 percent, although part of China's increase last year reflected stockpiling.

Statistics:

  • China's oil imports rose 33 percent last year.
  • India's oil imports rose 11 percent last year.
  • 37 percent of the world's population is comprised of China and India.
  • PetroKazakhstan has received proposals to acquire the entire company.
  • China National Petroleum Corporation has substantial oil investments of its own in Kazakhstan.
  • PetroChina's bid of $3.2 billion is lower than the $3.6 billion offer from India's Oil and Natural Gas Corporation.

Sources:

  • A person close to the negotiations, speaking on condition of anonymity.
  • The Oil and Natural Gas Corporation of India.
  • PetroChina.
  • Sam Dale, an oil industry expert with Energy Intelligence.
  • PetroKazakhstan's statement issued from its headquarters in Calgary, Alberta.