China National Petroleum Corp (CNPC) and its publicly traded arm, PetroChina, are reassessing their global strategy as they aim to revive dealmaking efforts. According to Lu Ruquan, head of CNPC’s Economics and Technology Research Institute (ETRI), the company is focusing on opportunities in gas liquefaction and deep-sea drilling and enhancing production from ageing wells.
Lu, who plays a key role in the company’s strategic discussions, hinted that CNPC may reignite its interest in acquiring large oil and gas assets, echoing its bold moves from two decades ago, such as the $4 billion acquisition of PetroKazakhstan and the takeover of Devon Energy’s Indonesian operations, according to reports.
This strategic shift would mark a return to the more aggressive expansion seen in the 1990s and 2000s when CNPC ventured into countries like Sudan and Chad and secured significant assets in Kazakhstan and Indonesia. Lu described the company’s three decades of overseas investments as “a vessel sailing to midstream,” emphasising the need for the company to accelerate its global acquisitions to avoid falling behind. Drawing from his experience as the former head of strategy and development at CNPC International, he provided a rare insight into the strategic mindset of one of China’s most influential state-owned enterprises.
CNPC, with PetroChina holding $37.5 billion in cash equivalents as of 2023, is well-positioned to make significant moves in the global oil and gas sector. Lu noted that CNPC might expand its investments in liquefied natural gas (LNG) in Qatar, building on a recent deal that secured a small stake in QatarEnergy’s large-scale gas liquefaction facilities alongside a multi-year offtake agreement. Additionally, CNPC is exploring opportunities in South American deep-sea blocks near Guyana, where China’s CNOOC Ltd., as part of an Exxon Mobil-led consortium, has made major discoveries.
While PetroChina remains a leading global producer, its share of output from international operations decreased to 11% last year, down from nearly 14% in 2019, according to company data. Chinese firms have been cautious with global acquisitions since the 2014-2015 oil price collapse. Lu also pointed out that sanctions on key hydrocarbon-rich nations like Venezuela, Iran, and Russia pose challenges, making it more feasible for CNPC to focus on extending existing contracts in countries such as Kazakhstan and Indonesia, where agreements are nearing expiration.
