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Oil firms may find BP asset race tough

06-30-2010 14:31 BJT

BEIJING, June 30 (Xinhuanet) --Chinese oil companies may find it tough to convert the potential opportunities that may arise when BP Plc decides to divest some of its assets into actual deals, analysts said on Tuesday.

Workers at a CNPC project in Chad. Chinese oil firms have been stepping up their overseas expansion pace in recent years.(Photo Provided to China Daily)
Workers at a CNPC project in Chad. Chinese oil firms have been stepping up their overseas 
expansion pace in recent years.(Photo Provided to China Daily)

Domestic companies will have to evaluate the deals cautiously if they want to benefit from them, they said.

Cash-rich Chinese oil companies are likely to join the list of potential bidders if BP sells some of its assets to fund the Gulf of Mexico oil spill clean up, said Chen Weidong, chief energy researcher with the energy research institute affiliated to the China National Offshore Oil Corp (Cnooc).

"Domestic companies must study the BP assets carefully," he said.

The valuation of oil and gas assets is affected by many factors, especially the fluctuating crude prices. Domestic oil companies "should make comprehensive asset evaluations" to benefit from the deals, said Chen.

As there are still a lot of uncertainties, oil companies should be well prepared for the difficulties, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"Domestic companies will face stiff competition from foreign peers for the valuable BP assets. It may not be an easy race to win," said Lin.

Although Chinese oil companies have been stepping up their overseas expansion pace in recent years, they still lack the requisite experience and management skills needed for such deals, he said.

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