General – CNOOC
China’s biggest offshore producer CNOOC is preparing to exit the North Sea’s largest field in a strategic shift of focus to newer oil and gas developments and away from Western assets, banking and industry sources said.
CNOOC has hired Bank of America to start preparing a formal sale of its North Sea assets, which could raise more than $3 billion, the four sources said.
CNOOC did not immediately respond to a request for comment. Bank of America declined to comment too.
CNOOC acquired the North Sea assets as part of its $15 billion purchase of Canadian producer Nexen in 2013, in its largest overseas acquisition yet.
The deal was then seen as evidence of China’s growing role in the international oil and gas industry as CNOOC took over the operatorship of Britain’s largest oilfield Buzzard, whose crude is among the streams that set the North Sea Brent benchmark oil price.
The planned sale coincides with a sharp rise in global oil and gas prices following a tightening of global supplies and oil exporter Russia’s invasion of Ukraine that began at the end of February.
Given the extreme volatility of the markets, it is unclear if buyers and sellers would be able to agree on the value of assets, the sources said.
CNOOC, which holds a 43.2% stake in the Buzzard field, oversaw investment in the drilling of new wells that arrested its declining output. Today Buzzard produces around 80,000 barrels per day.
CNOOC also operates and holds stakes in the Scott, Telford and Rochelle North Sea fields cluster and has a 36.5% stake in the Golden Eagle field.
CNOOC’s success in making sizeable discoveries offshore China, particularly in the vast Bohai Bay basin, has given it confidence to offload these marginal assets, the two Chinese sources said.