China’s energy majors may soon discover they’re not the only ones out in the international marketplace looking for assets to feed their hungry home economy, just as life at home also becomes more difficult as their domestic operations face more scrutiny over environmental issues. First a look at what’s happening overseas, where India has approved new rules allowing its state-run energy giants to pursue global M&A without first seeking government approval. (English article) The move will help to streamline a process that can delay overseas M&A bids by months, and is clearly aimed straight at economic rival China, whose CNOOC (NYSE: CEO; HKEx: 883), PetroChina (NYSE: PTR; Shanghai: 601857; HKEx: 857) and Sinopec (HKEx: 386; NYSE: SNP) have been particularly active on the global M&A scene these past few years in Beijing’s quest to make the country more energy self sufficient. As state-run companies, the China majors never bid against each other, though they frequently do come up against competition from major Western firms and aren’t afraid to overpay for assets, as exemplified by Sinopec’s plan announced this month to buy Canada’s Daylight Energy for double its market value when the deal was announced. (previous post) Look for this kind of premium to shoot even higher as Indian firms enter the fray, boding well for owners of energy assets but poorly for other big energy producers. Meantime at home, CNOOC is facing more production woes with its latest admission that one of its pipelines in the Bohai Bay had a “minor” leak and had to be shut down to make repairs. (company announcement) People who follow CNOOC will know the company and ConocoPhillips (NYSE: COP) used the word “minor” to describe a problem at one of their co-owned oilfields in Bohai Bay, even though the problem was later described by some environmental officials as a disaster. It’s probably still too early to say if this latest problem will rise to the “disaster” level. But one thing is clear, namely that CNOOC, PetroChina and other energy exploration companies in China will no longer have the rights that they had for most of the last 60 years to quietly cover up their accidents that cause major environmental damage and will have to behave more responsibly, which will ultimately hit their bottom lines.
Bottom line: India’s loosening of restrictions on foreign energy M&A means CNOOC, PetroChina and others will soon face a well-funded new competitor in the global market for energy assets.
Related postings 相关文章:
◙ Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空
◙ CNOOC Woes Spotlight Environmental Perils
◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦
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Everyone is buzzing over remarks from a senior party official saying government agencies should embrace mircroblogging to better perform their jobs, interpreting the comments to mean that the popular medium dominated by Sina’s (Nasdaq: SINA) Weibo service won’t come under regulatory pressure soon as many had feared. But a closer look at the actual remarks by Wang Chen, director of China’s State Council Information Office, offers no such reassurances, and I predict it’s only a matter of time before the industry indeed comes under strict new regulations, seriously hampering Weibo and other Twitter-like microblogging services in China. (
I wanted to start today with a report that shows that Chinese firms need some serious education in how to do good public relations and, equally important, need to understand when NOT to embark on high-profile campaigns. Just a day after I chastised telecoms equipment giant Huawei for its poorlyl-timed criticism of a US government decision (
After a week or two of relative quiet, trouble in the group buying space has come bursting back into the headlines with the latest report of mass layoffs at one of the industry’s biggest players, 55tuan. (
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China e-commerce visionary Jack Ma loves to talk about the power of the Internet, and now he’s experiencing that power directly, though not in the way he envisioned, as a group of unhappy merchants on his popular Taobao Mall platform rise up in rebellion over a recent massive fee hike. The uprising that has created chaos at the Taobao Mall, the B2C platform of Ma’s Alibaba Group, is just the latest in a string of crises that have plagued Ma and his company this year, each due to a big miscalculation. This time a large group of small- to medium-sized merchants have created chaos on the platform, flooding larger merchants with bogus orders and posting fake negative user comments on their sites, after Taobao hiked annual fees for merchants by up to 10 times, and implemented other policies that smaller merchants said were aimed at pushing them off the site. (
In a move that shouldn’t surprise anyone, China top networking equipment maker Huawei, which has been working hard to win its first major business in the China-phobic US market, has been rebuffed in its bid for contracts to help upgrade emergency networks in America. This bid was a foolish one to start with, as these networks were already sensitive to begin with for obvious reasons, as many US politicians still see Huawei as an arm of the Chinese government intent on using its networking hardware for spying as well as commercial purposes. (
After staging a brief rally this week, solar module makers are returning to the defensive posture they have held for most of this year amid new reports that the slump in demand that has led to their worst-ever crisis seems to be accelerating rather than easing. Media are reporting the price of silicon, the main ingredient used to make solar cells, dropped a hefty 5.8 percent on October 10 from just a week earlier, in the latest indication that demand remains weak from an industry that built up massive new capacity during a brief boom under incentives rolled out by Western governments in 2009 during the global financial crisis. (
