Three energy deals, $78B
August 18, 2009
While there's been a frenzy of deals in the alternative energy market, fossil fuels still dominate the numbers when it comes to consumption and investment from companies such as Exxon Mobil Corp. (NYSE:XOM). Note these three deals involving China and Australia, Russia and Venezuela, and Iran and Malaysia.
PetroChina Co. Ltd. has signed a $41 billion liquefied natural gas deal with Exxon Mobil. The subsidiary of China National Petroleum Corp. will import the LNG from the Australia-based Gorgon LNG project, a joint venture between Exxon, Royal Dutch Shell plc (NYSE:RDS.A) and Chevron Corp. (NYSE:CVX). The deal represents the largest trade deal between Australia and China ever. Reuters notes with the latest sale, PetroChina will be the largest buyer of gas from Gorgon. The report also cited a source with Chevron saying the company was in talks to supply a similar volume of Gorgon LNG to PetroChina's smaller rival, Cnooc Ltd.
Dealmakers will note that China and Australia were reported to have bad blood since sparring over a possible spy/bribery ordeal involving Stern Hu and others; Rio Tinto plc's (NYSE:RTP) decision to drop a $19.5 billion China deal; and pressure from politicians and others to protect Australia's valuable resources such as iron ore. Despite all that, the countries continue to deal. See our latest wrap up on China-Aussie dealmaking.
Oil powerhouse Venezuela hopes to reduce its ties with its main trade partner, the U.S., through a joint venture with Russian companies including Gazprom, Rosneft, Lukoil, TNK-BP and Surgutneftegaz. The deal could be worth up to $30 billion. They plan to develop the Junin 6 block in Venezuela's Orinoco oil belt, which is thought to have one of the largest oil sands deposits in the world. Bloomberg News says Gazprom, which recently placed loan participation notes and is building a stake in Sibir Energy plc, will lend Venezuela $4 billion by the end of the month.
Dealmaking in Iran has slowed after a disputed presidential election, which has forced companies such as Royal Dutch Shell and Total SA (NYSE:TOT) to put export projects on hold. But the country has turned to the East and is moving ahead with a $7 billion joint venture with Malaysia to develop two oil refineries. National Iranian Oil Engineering and Construction Co. and Malaysian SKSD established JV company SKS-PARS to oversee construction.
The amount of dealmaking in the oil and gas sector has increased, and we've noted that investment banks and law firms have been hiring in response to M&A.
And of course, China's breakneck growth is fueling deals. Most recently on the large-cap front, Chinese regulators recently approved China Petroleum & Chemical Corp.'s C$9.7 billion ($8.7 billion) takeover of Calgary, Alberta's Addax Petroleum Corp. That deal closed on Aug. 18. It was also rumored that China National Petroleum and Cnooc had $17 billion to acquire Argentinean oil driller YPF, a unit of Spain's Repsol YPF SA. - Baz Hiralal
http://www.thedeal.com/corporatedealmaker/2009/08/three_energy_deals_78_...
