Why was China forced to sell its assets in the U.S. to a British company?

By Samir Muradov

China's energy giant CNOOC International Ltd, a subsidiary of one of the largest oil and gas corporations in China, has announced the sale of its oil and gas assets in the U.S. Gulf of Mexico to the British company INEOS Group. The deal includes stakes in key deepwater fields Appomattox and Stampede, mature assets, auxiliary businesses, and various infrastructure facilities.

Although the financial terms of the deal have not been officially disclosed, sources close to the negotiations estimate its value at approximately $2 billion. The transaction is expected to be completed following regulatory approvals and the fulfillment of all conditions outlined in the Sale and Purchase Agreement (SPA).

CNOOC’s official stance attributes the decision to a strategic need to optimize its asset portfolio. In a statement, company chairman Liu Yunjie emphasized that the sale aligns with CNOOC’s corporate goals and would allow it to focus on more promising projects, particularly offshore fields in China.

However, experts suggest that geopolitical factors also played a significant role. The decision may have been influenced by concerns over potential U.S. sanctions, especially given the strained relations between China and Western nations. Trade disputes, accusations of human rights violations, and China's policies on Taiwan, coupled with its perceived support for Russia in the Ukraine conflict, have heightened pressure on Chinese companies operating in Western markets.

Previously, CNOOC had already withdrawn significant assets from countries such as the United Kingdom and Canada. In 2023, the company exited projects in the North Sea, the Eagle Ford and Rockies shale basins, and terminated its participation in oil sands development in Canada. Its decision to exit the U.S. market, one of the world’s largest energy hubs, could indicate a strategic shift away from global expansion in favor of less risky regions.


CNOOC

For British company INEOS, the deal with CNOOC represents a major step toward strengthening its position in the U.S. market, which remains one of the most attractive for international investors. The company’s leadership views the U.S. as a key platform for future growth. INEOS Energy CEO Brian Bucknell remarked that the agreement with CNOOC would mark the company's third major investment in the American energy sector in the past three years.

Previously, INEOS secured a liquefied natural gas (LNG) supply deal with Sempra and acquired assets from Chesapeake Energy in South Texas. Together, these investments exceed $3 billion, enabling the company to significantly boost production and expand its regional footprint.

The acquisition of advanced assets from CNOOC will add cutting-edge deepwater technology to INEOS’ portfolio. This will, in turn, increase the company’s overall production to more than 90,000 barrels of oil equivalent per day, solidifying its presence in the global energy market.

Despite the sale of its U.S. assets, CNOOC remains one of the world’s most technologically advanced oil and gas companies. Its involvement in deepwater projects such as Appomattox and Stampede provided the company with invaluable experience that is now being utilized in the development of offshore fields in the Bohai Bay Basin in China.

Company leadership highlights that this strategy not only minimizes risks associated with external pressures but also allows for the concentration of resources on higher-margin projects. China’s domestic market remains a priority for CNOOC, especially given the growing demand for energy resources.

The deal between CNOOC and INEOS takes place against the backdrop of worsening relations between China and the United States. Washington has intensified measures against Chinese companies operating in strategic sectors. In 2023, the U.S. administration imposed restrictions on the export of technologies related to energy and semiconductors, forcing many Chinese corporations to rethink their strategies in Western markets.

Furthermore, China faces increasing competition from Western corporations on the global stage. On the one hand, this compels companies like CNOOC to fortify their positions in the domestic market. On the other hand, it encourages diversification of investment flows to mitigate risks.

The sale of U.S. assets does not signal a complete withdrawal by CNOOC from international operations. On the contrary, the corporation continues to be active in regions such as Africa, the Middle East, and Southeast Asia, where geopolitical risks are significantly lower. These areas are becoming pivotal for the company’s expansion as it faces mounting pressure from Western countries.

For INEOS, the deal provides opportunities to scale up production—particularly crucial amid global energy market instability. Elevated oil and gas prices in recent years are driving companies to expand their presence in regions with steady demand and well-developed infrastructure.

The deal between CNOOC and INEOS illustrates the intricate interplay of business strategies and geopolitical realities. For CNOOC, this step minimizes external risks and refocuses efforts on stable markets. For INEOS, it represents an opportunity to strengthen its position in the U.S. market, which remains strategic for the global energy industry.

This case underscores the growing influence of international politics on the energy sector and highlights the importance of business adaptability to changing conditions. In the future, we are likely to see a continuation of the trend toward redistributing assets across regions as companies seek a balance between economic benefits and political stability.

News.Az