CEFC Expands Influence in Oil and Gas
Overseas acquisitions extend company's access to, involvement in global markets, Tang Zhihao reports.
CEFC China Energy, a privately owned Chinese energy and financial services provider, is keen to create partnerships with more energy companies in the Belt and Road countries to expand its footprint in the upstream and downstream oil and gas sectors.
The company said that it is the right time to look into merger and acquisition opportunities in the energy industry as the global oil price is at a historically low level.
The company has made breakthroughs in value chain expansion along the Belt and Road route over the past few years.
It signed a share transfer agreement with KazMunayGas (KMG), Kazakhstan's state-owned oil and gas company, at the end of 2016, acquiring 51 percent of KazMunayGas International. KMGI is a wholly-owned subsidiary of KMG, which is engaged in oil processing, sales and trading in the European market. The business operates over 1,000 gas stations in European countries including France, Romania and Bulgaria. It also owns many modern refineries in Europe. CEFC expands influence in oil and gas
The strategic acquisition enables CEFC China to access KMGI's advanced stations and oil depot management system, and acquires an international management team with more than 7,000 employees.
KMGI will also be a platform for CEFC China to acquire minority and controlling stakes in more European oil companies. The acquisition allows the company to have a bigger say in the oil and gas industry in the Black Sea and Mediterranean Sea areas.
CEFC China not only looks for business opportunities in Central Asia, but is also looking to seize opportunities in the Middle East.
It signed a crude oil supply agreement with the United Arab Emirates' Abu Dhabi National Oil Co in late February to obtain 4 percent interests in Abu Dhabi's ADCO onshore oil concession. It is the first time for a Chinese company to obtain such interests.
The 40-year agreement will provide more than 3.2 million metric tons of high-quality crude oil annually to the Chinese market.
CEFC China has also signed a long-term supply agreement with the Abu Dhabi National Oil Co that would secure another 10 million tons of oil per year.
The two agreements will provide a total of 13.2 million tons of high-quality crude oil annually to CEFC China.
"This marks an important milestone in our strategic cooperation. Long-term and stable onshore oil rights and interests will allow us to further cooperate with Abu Dhabi in the exploration of upstream oil and gas resources, oil storage and open market trading," said Ye Jianming, chairman of CEFC China.
The partnership also strengthens CEFC China's position in the upstream oil and gas sector in the Middle East, according to the company.
It vows to use existing resources and platforms to embrace more foreign partners in both the upstream and downstream sectors.
While focusing on investing in upstream oil and gas resources in the global market, all downstream terminals such as storage sites, petrol stations and refineries will be operated in a partnership model.
Based on KMGI's existing resources, CEFC will acquire more downstream terminal logistic enterprises including refineries, oil storage facilities and tubes, becoming an influential oil and gas supplier.
It will then explore business opportunities in emerging markets such as the Southeast Asian and Indian markets. It will take measures to better connect the Chinese energy market with the upstream industries in Central Asia and downstream industries in Europe.