Summary
The Shell and CNPC have made a joint offer for Australian Arrow Energy could represent a new trend of international collaboration in natural gas.
Chinese state companies have turned their interest from capital to global assets, advanced technologies and international operating skills. While international oil giants could satisfy their needs, Chinese state oil companies would be more willing to open the domestic market for them as aa exchange.
Analysis
The Shell and CNPC have made a joint offer offer for Australian Arrow Energy could represent a new trend of international collaboration in natural gas business, with which international oil and gas giants and major state-run oil companies are developing their new strategies of collaboration while being confronted with the changing global natural gas landscape and emerging new challenges.
The deal seems timely to Arrow Energy to gain capital needed to cover large LNG manufacturing costs and pin down international gas export market. For Shell, it would create a shortcut to enter coal-bed methane liquefying sector. Its partnering with CNPC is well regarded as a well-considerate and far-sighted strategy. The Chinese natural gas market is becoming one of the largest and the most dynamic ones in the world. China will be the major targeted supply market of Australian natural gas.
As the biggest natural gas supplier in the Chinese gas market, CNPC has been actively pursuing and securing international gas supply sources in addition to its increasing investment in developing domestic gas resources. It has recently accelerated investment in exploiting unconventional gas resources, particularly coal-bed methane and shale gas. While gaining good access to overseas gas resources, CNPC is eager to learn technologies and operating skills of unconventional gas exploitation and LNG manufacturing from major international oil and gas giants like Shell.
After three decades expansions, Chinese state companies have turned their requirements and interest from capital to global assets, advanced technologies and international operating skills. While international oil giants could satisfy the urgent needs of Chinese state oil companies, the Chinese market would be likely opened wider to them as a mutual beneficial exchange. As the future demand market is more concentrated on the developing and newly industrialized markets, and national oil companies are growing stronger, collaboration between international oil companies and national oil companies for mutual benefits is forming a major trend of the new stage development of global oil and gas business.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
