China has made its first foray into the international M&A market in nearly three years, splashing out $1.8 billion in Abu Dhabi last month. After spending heavily on assets around the world between 2009 and 2013, the Chinese “Big Three” state oil firms had stayed firmly on the sidelines during the oil price downturn, restrained by the lingering effects of a government corruption crackdown at home and the sting of bad upstream investments. The Abu Dhabi deal heralds a return of the Chinese to the M&A scene, although investments will be much more restrained than they were under the free-wheeling days of $100 oil, Chinese sources tell PIW. China National Petroleum Corp. (CNPC), which took 8% of Abu Dhabi’s 1.6 million barrel per day onshore concession, represents the first major deal by a big state player since 2014. China’s big three national oil firms — CNPC, Sinopec, China National Offshore Oil Corp. (CNOOC) — snapped up international oil assets to secure energy supplies for China’s rapidly growing economy and gain access to advanced technologies. In 2013, these three firms alone spent over $36 billion on upstream investments in places like Kazakhstan, Peru, Egypt, US shale and Angola (PIW Apr.22’13). The buying spree ground to a halt in 2014 as crude prices began to crash and Beijing started arresting oil officials. In 2016, $130 billion was spent on upstream M&A globally, according to 1Derrick — but not a penny came from the Big Three. As they dithered, Indian firms locked in a $3.3 bil- lion deal for two Russian East Siberian fields that had been earmarked for the Chinese (PIW Sep.26’16).
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