China's Banks Ease Foreign Energy Deals

HONG KONG — China is making a push to lock up energy reserves across the globe by offering much-needed credit to governments. Kazakhstan announced a $10 billion oil-for-loan deal with China Friday during its president’s state visit to Beijing.

Kazakhstan gets cash for new investment projects and China gets a 50% stake in a major Kazakhstan oil producer and priority on future energy cooperation.

China has already struck similar deals this year with state oil producers in Russia, Brazil and Venezuela. In February, China Development Bank extended a $25 billion financing package to Russia’s state-owned OAO Rosneft, its biggest oil producer, and OAO Transneft, its oil pipeline operator, in exchange for Russia sending about 300,000 barrels a day to China through a pipeline under construction.

China’s willingness to extend credit gives its state oil companies a leg up on Western competitors such as Exxon Mobil Corp., Chevron Corp. and BP PLC.

China’s government prefers financing acquisitions that give Chinese oil companies direct ownership of resources, but extends loans to foreign governments’ national oil companies directly if it gives the Chinese oil companies special access to future exploration projects or provides guaranteed oil supplies, according to bankers who work with the Chinese companies.

Wall St. Journal