Still in the Market
In case anyone seriously thought that China Inc. would retreat to lick its wounds after CNOOC's withdrawal from the bidding for Unocal, another Chinese state oil company, CNPC, has just agreed to acquire PetroKazakhstan for $4 billion. In the process, it outbid the Indian state oil company, ONGC. While Unocal offered plenty of strategic fit for state-owned CNOOC, this deal has none of the drawbacks that would have accompanied buying the California-based Unocal:

• No North American production to complicate matters
• No US regulatory approvals required
• No need to trade Asian gas production already committed Thailand for something else that could have reached China
• No pariah regimes to deal with (e.g. Burma)

Instead, we see a sensible, if somewhat pricey acquisition of a clever Canadian company with production in a country in China's strategic back yard (as well as Russia's), linked by a soon-to-be-completed oil pipeline to China.

More importantly, this is the face of China with which the international major oil companies are going to have to contend in the years to come: a tough competitor with a growing appetite and a willingness to pay over the mark for strategic assets in the countries open to foreign development of oil and gas reserves, and perhaps in some that aren't. Energy company strategists should banished any complacency over the relative ease with which Chevron outmaneuvered CNOOC from their thinking.