Chinese National Oil Companies Research Articles

The impact of NOCs in Chinese foreign policy: the cases of Angola and Sudan

AbstractChinese companies have invested substantially in countries abroad in recent years, including countries in Africa. This article investigates the activities of Chinese energy companies in Africa, looking at the cases of Angola and Sudan. It develops a theoretical framework that can examine the role of non-state actors in foreign policy. The article presents evidence that non-state actors play a role for Chinese foreign policy and sometimes go against the policy line from Beijing. Theoretically, it illuminates the increasing role played by national oil companies (NOCs) in foreign policy and contributes with explicitation of the role played by NOCs for the foreign policy of the state. The article also contributes with insights regarding the importance of concerns with domestic stability (weiwen) to Chinese foreign policy and how this motive relates to the Chinese NOC activities in a number of countries.

Have the Chinese national oil companies paid too much in overseas asset acquisitions?

This paper provides both a quantitative and qualitative analysis of whether the Chinese national oil companies have “overpaid” than their international counterparts in overseas asset acquisitions during 2001–2017. Using a hedonic pricing framework, we find that while the Chinese companies did not pay more than international oil companies for the period of 2001–2008, there is statistically significant evidence that they overpaid during the 2009–2016 period. A counterfactual analysis was conducted to quantify the extent of the overpayment. Interviews and qualitative analysis suggest that the overpayment mainly results from a rush to gain projects in a period of high oil prices and easier bank loans after the global financial crisis rather than concerns about energy security or other political considerations.

The energy transition of the Chinese national oil companies towards renewables: An opportunity or a bottleneck?

Renewable energy is the fastest growing energy source. China, the world’s biggest energy consumer, is also the largest investor in renewable energy. Although it is expected that oil will continue to dominate the energy mix in China and in the world by 2040, a transition towards a renewable model in the energy sector is unfolding, which has also been acknowledged by international oil companies (IOCs). Then, how the Chinese national oil companies (NOCs) approach such a transition becomes important – to what extent their investment transform and what are the pressures and influences behind the transformation. This paper investigates the positions and decisions taken by the Chinese NOCs, through comparing the similarities and differences between these NOCs and IOCs. A neo-Gramscian theoretical framework that considers environmental governance through dynamics at material, organisational, and discursive levels is used to examine the Chinese NOCs’ energy transition. We find that the Chinese NOCs’ energy transition is determined by: materially, economic profits; organisationally, the administrative environmental governance structure that copes with the market competition against IOCs and other state-owned companies; and discursively, the political concept of ecological civilisation.

Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?

Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?

Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?

Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?

Have the Chinese National Oil Companies Paid Too Much in Overseas Asset Acquisition?

This paper provides both a quantitative and qualitative analysis of whether the Chinese oil companies have “overpaid” than international oil companies in overseas asset acquisitions. By controlling oil price and a number of asset- and deal-specific attributes that are known to affect the valuation of oil and gas projects, we find that while the Chinese companies did not overpay than international oil companies for the period of 2001-2008, there is statistically significant evidence that they overpaid during the 2009-2016 period (mainly 2009-2013). The counterfactual analysis indicates that the Chinese companies paid, on average, 64 percent more than what an international oil company would have paid for the same assets during the post-2008 period. Interviews with industry experts and qualitative analysis suggest that the overpayment mainly results from a series of mistakes due to lack of experience and rush for projects in a period of high oil prices rather than concerns about energy security or other political considerations. The results raise concerns over the efficiency and corporate governance of Chinese state-owned companies, pointing to the need for further reforms.

Does the Structural Power of Business Matter in State Capitalism?: Evidence from China's Oil Politics under Xi Jinping

Based on the background of Chinese oil politics under Xi Jinping, this article studies the “structural power of business” to test the concept within the economic system of state capitalism. Many elements of structural power discourse are valid, such as the political influence of business, the role of information‐expertise, the role of business competitiveness and fluidity, and the effect of external factors. However, the dominance and mechanism of the structural power of Chinese national oil companies presents differently because of the unique state‐business relations in the Chinese oil sector.

China’s Statist Energy Relations with Turkmenistan and Kazakhstan

AbstractDuring the last decade, China’s diplomatic, economic, security and multilateral relations with Resource-Rich Countries (rrcs) in general, and with Central Asia and the Caspian Region (cacr) in particular, created a regional web of complementarity connecting states and societies. This trend reflects a dimension of the “statist globalization” of the Chinese economy. Chinese National Oil Companies (cnocs) are powerful actors within this emerging network. This comes as no surprise, as China’s domestic power-wealth structure relies on uninterrupted foreign (energy) supplies. The main aim of this paper will be to present a geopolitical economic reflection on China’s post-Cold War energy relations with therrcs of Turkmenistan and Kazakhstan. Our theoretical framework, which stems from critical geopolitics, tries to conceptualize the geopolitical economic policy tools used by China’s ruling class inrrcs in general and the two cases in particular.

Evolution of the East Central Eurasian Hydrocarbon Energy Complex

Abstract This article analyzes the evolution of the East Central Eurasian energy triangle China-Kazakhstan-Russia. It treats in depth the behavior of Chinese national oil companies (nocs) regarding foreign direct investment (fdi) in Kazakhstan and Russia. The first section sets out the framework of geo-economics in a complexity-science perspective, in particular the key analytical categories of the ‘emergent coherence’ approach, and it defines a ‘hydrocarbon energy complex’ (hec). The second section analyzes the formation of the East Central Eurasian hec by examining Chinese energy investment in Kazakhstan and Russia since 1991, using the ‘emergent coherence’ framework as explained. The third section examines the geo-economics of Sino-Russian competition for energy resources in Central Asia, specifically in Kazakhstan and Turkmenistan, over the same timeframe. The fourth section presents conclusions about changes over time in the behavior of Chinese nocs regarding investment in Kazakhstan and Russia and cooperation with them in the energy sector. The fifth section, the conclusion, summarizes the findings, gives them geopolitical perspective, and concludes on the criteria determining the delimitation of the distinct chronological periods emerging from application of the ‘emergent coherence’ framework.

A comparative perspective of India and China in the oil industry in West Africa

In West Africa, Chinese national oil companies (NOCs) have outbid their Indian competitors. Indeed, over the years Chinese companies have proved to be less risk averse and are preferred as partners by international oil companies and African NOCs. This article attempts to explain why. It does so by examining factors such as foreign exchange reserves, access to capital, rate of return on investment, valuation of asset, risk aversion, ability to acquire technology and the difference in the economic, political and diplomatic support received by the Indian and Chinese oil companies from their respective governments.

The end of exceptionalism? Explaining Chinese National Oil Companies’ overseas investments

ABSTRACTThis article examines how Chinese National Oil Companies (NOCs) make location decisions regarding investments in overseas oil and gas. We argue that these location decisions are determined by the allocation of risk between state-owned enterprises (SOEs) and high-level politics. As such, the investment decisions made by NOCs change over time and according to who bears the risk of the investment: the firm or the state. An econometric analysis based on a novel data-set of Chinese NOCs’ OFDI over a 14-year period supports this argument. Our findings challenge existing notions of Chinese exceptionalism: rather than making ‘risk perverse’ location decisions, we find that NOCs seek out host states with robust provisions for the rule of law, control over corruption, and that have a history of stability over the long run.

Evaluating China’s Oil Security and Overseas Oil Investment

Oil security is the major concern of China’s energy policy due to the no effective substitute nature of oil and the heavy reliance on internationally imported crude oil. In this paper, a synthesized indicator system was established to analyze China’s oil security from four aspects and Chinese government’s oil security policies were also discussed. From this analysis, we concluded that the main risk in China’s oil security was the gaps between domestic oil supply and demand, and the main means that Chinese government employed on securing oil safety was oil importing diversification, improving transnational pipeline conditions, and enhancing stable domestic oil production. Furthermore, the multiple roles of overseas equity oil production from Chinese National Oil Companies in securing oil safety were discussed and the possible measures and policies on further improving oil safety were also suggested.

Outward Foreign Direct Investment by Chinese National Oil Companies

Developed countries have become increasingly suspicious about the rapid growth of Chinese investments in their home countries and abroad, commonly citing potential threats to national security and global governance as the main sources of anxieties. As a result, policy measures in some developed markets have been put in place to create additional regulation and oversight, specifically in highly regulated and strategic industries, such as the oil sector. This article refutes a number of popular myths about Chinese investments in the global oil industry, and suggests a more rigorous dialogue with the Chinese authorities relating to their integration into international institutions.

The Transnationalization Strategy of Chinese Oil Companies: Case Studies of Sudan and Saudi Arabia

This paper examines why Chinese National Oil Companies (cnocs) conduct transnationalization and why the level of transnationalization remains low. Part one of the paper reveals the three main factors behind the transnationalization process since China has become a net importer of oil. Firstly, following economic reform in the 1990s, oil companies acquired autonomy and began to address the problem of domestic resource scarcity by seeking business opportunities abroad. Given the dependency on oil imports, the Chinese government is worried about energy security and so supports the overseas activities of nocs to ensure reliable sources of international oil. Furthermore, some basic conditions for transnationalization have been met: nocs have more than 30 years of domestic experience in oil exploration and development; the structural change of the international oil market, with resource countries looking East and welcoming cooperation with China; and the strategic adjustment of established international companies, making room for participation by Chinese companies. Part two evaluates the level of transnationalization of Chinese oil companies from a comparative perspective using uncted’s Transnationality Index (tni). Subsequently, four challenges to transnationalization are identified: geopolitical risks, resource nationalism, business competitiveness and human resources development. Part three provides empirical analysis on the performance of cnocs in Sudan and Saudi Arabia, focusing primarily on the driving forces, conditions, achievements and challenges of cnocs in these two countries; it also shows how some of the challenges are successfully addressed. Three conclusions are reached: that the ongoing transnationalization of cnocs is a necessary result of the combination of a number of factors; that we should not exaggerate the level of transnationalization of cnocs, which remains low. Moreover, by addressing the challenges, cnocs are exploring a new way of transnationalization.

Global Networks and the Two Faces of Chinese National Oil Companies

This paper investigates the patterns of transnational investments and alliances of Chinese state-owned oil companies since the mid-1990s and the social networks of their directors, taking the case ofcnpcand its listed subsidiary PetroChina as the example. Using Social Network Analysis, I will map how the oil companies and their directors are embedded in corporate and political networks both inside and outside China. The preliminary findings presented in this study show that with their overseas expansion,cnpcand PetroChina increasingly collaborate with other oil companies. Significantly, also forming what I have called ‘hybrid alliances’ with Western private oil majors. However, they remain wedded to a different role at home, where they are expected to adhere to priorities and values tightly knit to the state, such as supply security and social responsibilities. This duality is mirrored by the Chinese oil company directors who must maintain a balancing act between their ‘two faces’ of corporate managers, on the one hand, and commitments to party-state interests, on the other.

Chinese Energy Companies’ Relations with Russia and Kazakhstan

This article concerns Chinese energy relations with Kazakhstan and Russia, surveying the foreign direct investment (fdi) behavior of Chinese National Oil Companies (nocs) in Kazakhstan and Russia. The first section provides a schematic overview of the general development of Chinese fdi strategy and behavior from the disintegration of the Soviet Union up until the present day. It systematically explains how that development occurred in three phases and gives some key indicators for distinguishing among the phases and the transition between successive phases. The second section looks more closely at the fdi strategy and behavior of the Chinese nocs specifically regarding Kazakhstan and Russia, periodizing it according to the first two of the three chronological phases distinguished in the first section. The third section of the article examines still more closely the phenomenon regarding Kazakhstan and Russia from the end of the last decade up until the present day, dividing the third above-mentioned phase into three subphases and inspecting the first two, of which the second is still ongoing. The fourth section of the article evaluates the conduct of Chinese nocs with regard to Kazakhstan and Russia from the standpoint of motives of corporate behavior and comparative incentive structures. The fifth section of the article concludes by introducing some caveats on the basis of a glance at recent behavior with respect to another large resource-rich country, Canada, where Chinese nocs have made massive fdi for some years now, but which has a rather different economic and social structure from Kazakhstan and Russia. The last section of the conclusion also includes a few final comments on the prospects for Chinese energy and Chinese nocs during the remainder of the decade and into the 2020s, on the basis of the analytical framework employed to structure the narrative analysis in the body of the article.

Chinese National Oil Companies in Ghana: The Cases of cnooc and Sinopec

This article uses the case of Ghana to provide insight into the policies and strategies used by, as well as the cooperation between, Chinese state actors in their quest for natural resources in Africa. In 2007, Ghana discovered commercial quantities of oil. While the so-called Jubilee oilfield was initially divided amongst primarily Western oil companies, in 2010 the China National Offshore Oil Corporation partnered with Ghana’s national oil company to try and purchase a stake in Jubilee. Although this bid was rejected, later that year a second Chinese state-owned oil company, Sinopec, was able to access Ghana’s oil indirectly through an offtaker agreement, linked to a $3 billion dollar loan provided by the state-owned China Development Bank. The article uses these two cases to examine the level of coordination between the strategies of Chinese state actors in their attempts to access African natural resources. It shows that China’s national oil companies and policy banks operate in increasingly autonomous ways. This goes against the developmental state thesis, which argues that the Chinese state has full control over the overseas activities of its state actors. The article also shows that national political institutions in Africa can make use of and are able to influence Chinese resource deals, countering the notion of African passivity.

Crude 'Oil Mercantilism'? Chinese Oil Engagement in Kazakhstan

In 1991, the state-owned China National Petroleum Corporation (CNPC) commenced the first Chinese national oil company equity oil investment overseas when it invested in a UN-sponsored oil sands project in Canada. Since then, the CNPC and the other Chinese national oil companies (Sinopec and the CNOOC) have steadily increased their equity oil investments in developing nations, sometimes with the assistance of various Chinese party and government organs. Viewed in the context of China’s burgeoning oil consumption and plateauing oil production, these investments have led to accusations by Western analysts and policy makers that China is engaging in “mercantilism” by “locking up” oil supplies from vulnerable developing nations to assuage their mounting energy-security woes. Through examining Chinese oil engagement in Kazakhstan, this paper will analyze whether accusations of “mercantilism” can adequately capture the complexities and dynamics that drive Chinese oil company investment in developing nations. This will be achieved by first surveying contemporary debates regarding Chinese oil engagement abroad and then linking these debates to historical and contemporary conceptualizations of mercantilism. This will allow for a new multi-faceted definition of “oil mercantilist” behaviour, which will shift the label from a statement of ethical value to a statement of empirical fact that can be tested. This definition will then be used to examine the institutional contexts in China that support and counter contemporary accusations of oil mercantilism, and then to explore Chinese oil engagement in Kazakhstan from 1996 to the present day. This paper will contribute to emerging literature that suggests Chinese oil investment and diplomacy cannot be simply understood through mercantilist perspectives. Analyses of Chinese oil engagement need to recognize the important influence that China’s institutional reforms have had on Chinese national oil companies’ increasingly commercial approach to foreign investment, in addition to the unique host-country contexts China encounters through its oil investments.

Learning from Failure: China's Overseas Oil Investments

Thirsty for oil and other raw materials needed to fuel its breakneck development, China is funnelling money and manpower into an expanding number of countries in order to secure access to natural resources. This effort has successfully increased Chinese oil assets overseas but it has also exposed Beijing and Chinese national oil companies (NOCs) to significant risks. The present paper focuses on one type of risk – political risk – and how it has affected China's global quest for oil since 1993. It starts with a brief overview of political risk. It then looks at political risk management as applied to the oil industry in general. The paper continues with a discussion of the political risk management of Chinese national oil companies over time. This includes a concise examination of several instances in which the interests of Chinese NOCs have been undermined due to poor management of political risk. Recent developments suggest that Chinese NOCs are learning from these mistakes and adjusting their strategies accordingly. Still China's own socio-political context continues to hamper the ability of Chinese NOCs to deal with on-the-ground realities that are clearly much more unstable than their own.

The overseas acquisitions and equity oil shares of Chinese national oil companies: A threat to the West but a boost to China's energy security?

This paper argues that both China and the Western countries need to de-politicize China's global quest for energy security. The Western politicians need to recognize that their rhetoric in relation to China's efforts to secure energy supplies overseas has done nothing but intensify China's fear that they might seek to deny China's access to the oil it needs for the development. China needs to reconsider its stance of distrusting global oil markets and to recognize that the reliance on aggressive acquisitions of overseas oil fields and equity oil production has been of little help in strengthening its energy security. Given that China's energy security depends increasingly and deeply on the stability of global oil markets and reliable and growing oil supplies to the market, China shares with other major oil importing countries profound common interests in maintaining and strengthening the stability of global oil markets and reducing the chance of potential disruptions to oil supply and the resulting damaging oil price shocks.