By Jenny Gross
LONDON--Cnooc Ltd.'s (CEO) proposed bid for Canadian oil-and-gas
producer Nexen Inc. (NXY) would increase Asia's sway and influence
over the pricing of Brent crude, the global oil benchmark, market
analysts said Tuesday.
The proposed takeover, which would be China's biggest foreign
acquisition, would put the largest crude stream that feeds into the
physical Brent benchmark into Chinese hands. This would mean
exclusive insight into North Sea production issues and maintenance
that will affect the price of Brent crude and other crudes priced
off of it.
"China will be able to leverage much more than Nexen the
knowledge and trading advantage of running that field," said
Olivier Jakob, managing director of Swiss-consultancy Petromatrix,
in a note.
The deal, announced Monday, came within hours of another
state-backed Chinese company, China Petroleum & Chemical Corp.,
better known as Sinopec (0338.HK), agreeing to acquire a 49% stake
in U.K. North Sea assets owned by Canada's Talisman Energy Inc. If
completed, the two deals would give the companies roughly an 11%
share of the U.K.'s oil and gas production.
Price reporting agency Platts said it was too soon to speculate
what impact this would have on the Brent market.
"Platts is following this deal, as it would with any major
market event, and continues to be in regular contact with all key
stakeholders on any matters related to the Brent crude oil
benchmark," Platts said in a statement emailed to Dow Jones
Newswires.
Cnooc would be unlikely to use its new influence over North Sea
crude to manipulate the market, said Torbjorn Kjus, oil market
analyst at DnB NOR. The potential deal rather highlights the
general issue of Brent being heavily affected by North Sea
production issues, and a new benchmark would be needed to better
suit global markets, he said.
The acquisition would not only increase China's say in the Brent
benchmark, but would also give it access to Nexen's expertise in
shale gas plays in North America. This is would be a big gain for
Cnooc, which hopes to develop shale gas domestically, but is
currently far behind in technology needed to do so, said Eugene
Lindell, senior market analyst at JBC Energy.
"If China can manage to mirror issues at home with shale oil,
that would be massive," Mr. Lindell said.
Write to Jenny Gross at jenny.gross@dowjones.com; Twitter:
@jgginlondon (Sarah Kent and Konstantin Rozhnov in London
contributed to this report.)
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