By Frank James

China's insatiable thirst for energy to power an economy that essentially has become the world's supplier, has it in talks that could lead to Chinese companies for the first time extracting oil and gas from the Gulf of Mexico.

Cnooc, China's oil and gas giant, is in negotiations with Norway's StatoilHydro ASA, The Wall Street Journal reports.

The StatoilHydro website indicates that the company has an agreement with Cuba's Cupet oil company to explore and perhaps produce oil off Cuba.

The Wall Street Journal reports the following:

Cnooc Ltd. is in talks with Norway's StatoilHydro ASA over a deal that would open the U.S. Gulf of Mexico to China's oil companies for the first time, a person familiar with the matter said.
The move is significant as Cnooc's aborted $18.5 billion bid for California-based Unocal Corp. in 2005 is widely seen as having deterred state-owned Chinese oil giants from investing in U.S. oil and gas assets. Cnooc withdrew its offer for Unocal after it drew a storm of protests from some U.S. politicians.
But as tight credit has caused a lull in spending on offshore exploration, appetite for Chinese capital has grown, and opposition to Chinese investment may be less likely.
The U.S. Gulf of Mexico remains one of the most plentiful areas of the world for oil discoveries, with billions of barrels of crude believed to be trapped below the seabed. This is attracting Chinese companies at a time when they are encountering difficulties in tying up deals elsewhere in the world, partly because oil-rich countries want greater control over their resources.

China has tried in different ways to exploit the gulf's oil resources. Indeed, last year, talks between Chinese companies and Cuba to exploit Cuba's off-shore oil and gas fields led the Bush Administration and Republican lawmakers to unsuccessfully seek to open U.S. drilling on the Continental Outer Shelf. The Democratic-controlled Congress blocked those efforts.

categories: Energy

1:49 - October 16, 2009

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