China Oilfield bid to enter Russia fails
Russia has rejected a bid by China Oilfield Services Ltd to buy a unit of TNK-BP, smothering what would have been the Chinese firm's first acquisition abroad at the final hurdle and sending its shares 12 percent lower.
State-owned China Oilfield, the drilling and equipment arm of top Chinese offshore oil producer CNOOC Group, had agreed to buy oil services firm STU from TNK-BP for more than $10 million, making its maiden foray into the world's No. 2 oil exporting country.
Now, a company official told Reuters the Russian government had thrown out the deal -- which both firms had thought would go ahead with little obstacle -- without a word of explanation. China Oilfield had expected the Russian deal to be finalised last April. It had already won Beijing's blessing and obtained approval from both companies.
China Oilfield now views Russia, the Middle East and the Gulf of Mexico as strategic markets it needs to explore. It already maintains a presence in Southeast Asia.
But if it eventually wins entry into Russia, it will still lag Western oilfield services giants such as Schlumberger Ltd and Halliburton Co , which have bought into local independents and now control about a third of the Russian service sector. Russian oil majors and independents each hold a third.
China Oilfield Chief Executive Yuan Guangyu told Reuters last August that the company was in advanced talks to buy another foreign firm, in a deal that would dwarf the STU transaction.
I don't think they have the scale to buy any listed company. If they do look it's probably going to be private smaller companies
The firm has operations in more than 10 countries and derived 18 percent of its revenue from abroad in the first half of 2007. It aims to raise that share to 30 percent by 2008.
