Understanding China, One Blog at a Time

An American in China

The Fat Lady is Singing- China is Buying US Gas Leases

Posted by w_thames_the_d on January 31, 2011

Read it and weep…


“SHANGHAI (Dow Jones)–China’s Cnooc Ltd. (CEO) is buying into several shale oil and gas leases in the U.S. owned by Chesapeake Energy Corp. (CHK) for US$570 million in cash, in the latest move by a Chinese oil company to learn a technology that has transformed the U.S. gas industry.

Also, Cnooc will fund two-thirds of Chesapeake’s share of drilling and other costs up to maximum of US$697 million, the two companies said in a statement Monday.

The deal follows a similar Cnooc-Chesapeake agreement in October 2010 under which the Chinese company bought one-third of Chesapeake’s 600,000-acre Eagle Ford, Texas, shale oil and gas project for US$1.08 billion–a pact which was the first major investment by a China state-run company in onshore energy reserves in the U.S.

Chinese companies had until then been reluctant to invest in U.S. energy reserves, following Cnooc’s 2005 bid to take over California-based Unocal Corp. being blocked by a nationalist political uproar.

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