Oil turmoils test Chinese buyers’ risk appetite

SINGAPORE/HONG KONG – Chinese oil firms may have snared large foreign assets at fair prices, fanning their reputation as non-aggressive buyers, but their investments are being tested by turmoil in some of the countries.

Major delays in the projects sparked by attacks or violent protests could wipe hundreds of millions of dollars off the present value of the Chinese acquisitions, analysts said.

Prices paid recently by companies such as CNOOC Ltd. and China National Petroleum Corp. (CNPC) for assets in Nigeria, Syria and Ecuador were regarded by some bankers and analysts as reasonable or cheap.

“We have looked at the price they paid for the deals. Our conclusion is that they are not overpaying,” said Gavin Thompson, China country manager for Wood Mackenzie.

“They are actually paying very competitive prices compared to other recent deals partly because they are assuming a lot of above-ground risks,” he said.

Reuters