China’s CNOOC Considers Pulling Out of Canada, US and UK

China’s biggest oil and gas producer CNOOC is considering plans to cease operations in Canada, the US and the UK, Reuters news agency reported today.

Reuters cited “senior industry sources” who were speaking on condition of anonymity over the sensitivity of the issue. CNOOC has not yet publicly commented on the reports.

According to Reuters, the industry source said that CNOOC is seeking to sell "marginal and hard to manage" assets ahead of its Shanghai stock listing, which is planned for next month.

"Assets like Gulf of Mexico deepwater are technologically challenging and CNOOC really needed to work with partners to learn, but company executives were not even allowed to visit the U.S. offices. It had been a pain all along these years and the Trump administration's blacklisting of CNOOC made it worse," said the source, quoted in the Reuters news report.

CNOOC owns assets in the UK’s North Sea where it operates several assets including Buzzard, one of the UK’s highest producing fields, according to the company’s website. In Canada, the company operates oil sands and shale gas assets and has an interest in a wind farm in southern Alberta. In the United States, the company has onshore assets in South Texas, Colorado and Wyoming and offshore assets in the Gulf of Mexico.

Reuters calculates CNOOC's assets in these three countries produce around 220,000 barrels of oil equivalent per day.

Tensions between China and West were already running high over disputes on trade and human rights and Russia’s war in Ukraine has only served to ratchet up the pressure as China has refused to condemn the invasion.

Last week, the United States issued a warning to China and others against helping Russia evade Western sanctions.

“The unified coalition of sanctioning countries will not be indifferent to actions that undermine the sanctions we’ve put in place," US Treasury Secretary Janet Yellen said in remarks at the Atlantic Council. 

Western sanctions against Russia include a wide range of measures that particularly impact energy, defence and financial sectors.  The sanctions limit the ability of Russia to conduct business transaction in dollars, yen and pounds, and euros. 

Many western oil companies have stopped or announced plans to stop Russian operations. BP, for instance, announced that it would sell its 20% stake in Russia’s Rosneft. Shell and ExxonMobil have also announced plans to close down partnerships and operations in Russia.

China has said that it will "continue to have normal trade co-operation" with Russia despite Western sanctions. Overall trade between Russian and China was up 12% in March 2022 from the previous year, according to the BBC, and China accounted for approximately 18% of Russian exports in 2021.  

The South China Morning Post reported that Joseph Yam Chi-kwong, the former chief executive of Hong Kong Monetary Authority (HKMA), said that US sanctions are a "stupid and crazy" strategy that have "weaponized" the financial markets and could undermine the US dollar's position as the world's reserve currency.

CNOOC was delisted from the US stock exchanges last year after former US President Donald Trump blacklisted the company over concerns about links to the Chinese military. The company expects to raise 28.08 billion yuan ($4.41bn USD) when it lists on the Shanghai stock exchange later this month.