Ron Bousso & Chen Aizhu

LONDON/SINGAPORE – CNOOC, China’s largest offshore oil and gas producer (NYSE:) Ltd., is preparing for the end of its operations in Britain and Canada, according to industry sources. This decision was made in response to concerns that assets in Beijing could be subject to Western sanctions.

China’s relations with the West are strained over trade and human rights. Tensions have grown since Russia’s invasion in Ukraine which China refused to condemn.

According to the United States, China might face serious consequences for helping Russia avoid Western sanctions. The financial sanctions include measures to restrict Russia’s currency access and to make international payments more difficult.

CNOOC didn’t immediately respond.

The companies periodically review their portfolios. However, the process of exiting would be less than 10 years after CNOOC, the state-owned Chinese company, entered the countries through a $15 billion purchase of Nexen in Canada. This deal transformed China’s champion into a major global producer.

According to Reuters, assets that include stakes at major North Sea and Gulf of Mexico fields as well large Canadian oil sands project investments produce about 220,000 barrels of crude oil equivalent each day (boed).

Reuters revealed that CNOOC (NYSE:) had employed Bank of America (NYSE.) to assist with the preparation of North Sea asset sales. This includes a stake of one of the biggest fields in the basin.

CNOOC launched a global portfolio assessment ahead of its scheduled public listing on the Shanghai Stock Exchange later in the month. This is primarily aimed at taping alternative financing following delisting its U.S. shares last Oct.

This was part of an effort by Donald Trump’s 2020 administration to target several Chinese companies Washington claimed were controlled or owned by the Chinese military. China strongly condemned this move.

CNOOC has also taken advantage of an increase in oil and gasoline prices due to Russia’s invasion Ukraine, Feb. 24, 2014. It hopes to draw buyers as Western nations seek to produce domestic energy to replace Russian.

CNOOC, which is seeking to exit the West, wants to buy new assets in Latin America, Africa and the Middle East. It also plans to prioritize the development of new large prospects in Brazil Guyana, Uganda and Brazil.

‘A PAIN’

According to Reuters, a source within the industry said that CNOOC wants to sell assets “marginalized and difficult to manage” in Britain, Canada, and the United States.

Because of the sensitive nature of the topic, all sources agreed to speak anonymously.

According to an industry source, CNOOC’s chairman Wang Dongjin found it difficult managing Nexen assets in the past due to red tape and higher operating costs than other developing countries.

CNOOC, in particular, has had to overcome obstacles in operating in America, like Washington’s security clearances for Chinese executives who want to enter the United States.  

CNOOC had to partner with partners for technology-intensive assets like the Gulf of Mexico deepwater. But company executives weren’t permitted to visit U.S. headquarters. The Trump administration’s blacklisting CNOOC was a major problem over the years, and it made matters worse,” stated the source.

CNOOC warned that additional sanctions could be imposed in the prospectus it prepared before its initial public offering.

CNOOC explained that “we cannot predict if this company or its affiliated partners will be affected in the future by U.S sanctions, if policies are changed.”

CNOOC has assets in the US in Eagle Ford and Rockies Shale Basins. It also holds stakes in Stampede and Appomattox offshore fields.

The main Canadian oil sands assets of the company are Long Lake in Alberta Province and Hangingstone.