CNOOC Looks for Gulf of Mexico Oil Partners

Source: Bloomberg 9/15/2017, Location: South America

CNOOC Ltd. is searching for partners to develop oil prospects deep into the Gulf of Mexico as the Chinese giant extends its global reach.

After bidding alone for exploration rights in Mexico’s first-ever deep-water auction in 2016, Cnooc is seeking deals known as farmouts, a common type of joint venture where a stake in an oil prospect is exchanged for help with drilling and production. The company has yet to choose partners, a Beijing-based spokeswoman for CNOOC said.

China, the world’s biggest oil consumer after the U.S., has sought a foothold in crude production everywhere from Africa to Canada as it looks to ensure supplies to its fast-growing economy. Several Latin American countries like Venezuela and Brazil have taken advantage of China’s thirst for crude to secure investments or loans that haven’t always been easy to obtain elsewhere.

CNOOC is the first foreign producer to seek a farmout in Mexico since the opening of the country’s oil industry to competition, following decades of a monopoly in the hands of state-owned producer Petroleos Mexicanos.

"It makes sense" that CNOOC would seek a partner, Juan Carlos Zepeda, Mexico’s oil commissioner, said in a phone interview from Mexico City. "It’s logical because in deep waters, companies normally develop the projects in consortium groups or partnerships."

If CNOOC seeks a partner to act as operator in one or both of its deep water oil areas, it would have to be approved by the country’s oil regulator, Zepeda said.


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