China’s Nexen Plans Gulf of Mexico Oil Exit Amid Trade War -Sources

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September 27, 2018

A Tension Leg Platform at the Hess-operated Stampede deepwater oil and gas field in the U.S. Gulf of Mexico. Nexen holds 25 percent interest in the development. Photo: Hess

ReutersBy Jessica Resnick-Ault and Ron Bousso NEW YORK/LONDON, Sept 26 (Reuters) – Nexen Petroleum, a unit of China’s CNOOC Ltd, plans to exit the United States, divesting its stake in giant oil and gas developments in the Gulf of Mexico as trade tensions between two countries mount, three people familiar with the plan told Reuters on Wednesday.

Nexen has not determined whether it will sell the assets outright or swap offshore acres with another company, the people said, speaking on condition of anonymity as the talks are private.

One of the people said the decision to pull out of the Gulf was due to rising trade tensions between Washington and Beijing; the other two did not know the reason for the planned sale.

A spokeswoman for Nexen, based in Calgary, did not immediately respond to calls and an email seeking comment.

The world’s two largest economies have locked horns over trade for months, beginning with a series of levies earlier in the year, and little progress has been made in resolving the dispute.

Additional U.S. tariffs on $200 billion worth of imported Chinese goods kicked in on Monday, and Beijing retaliated with tariffs on $60 billion of U.S. products, including liquefied natural gas (LNG).

Crude oil has not been included in the list of goods subject to tariffs.

CNOOC bought Nexen in 2013 for $15.1 billion, as China mounted a campaign to acquire global natural resources. The deal gave CNOOC access to acreage in the Gulf of Mexico, the UK North Sea and off the coast of Western Africa.

Nexen holds a 25 percent interest in Hess Corp’s Stampede development, about 115 miles (185 kilometers) off the coast of Louisiana. The platform at Stampede began producing oil in January and has the ability to process 80,000 barrels of oil and 50 million cubic feet of natural gas a day.

Nexen also has a 21 percent interest in Royal Dutch Shell’s Appomattox development, located 80 miles (128 km) off the coast of Louisiana. The Appomattox platform is forecast to have peak production of 175,000 barrels of oil equivalent per day and probable reserves of 700 million barrels of oil equivalent.

Typically, co-owners of acreage would have the first crack at taking on assets a partner is planning on selling.

Nexen has not leased any new acreage in the Gulf of Mexico since it was bought by CNOOC, according to data from the Bureau of Ocean Energy Management (BOEM). Nexen sold small acreage plots to Cox Oil this year and Total SA last year, according to BOEM data.

Nexen has not acquired any stakes in Gulf of Mexico blocks this year from other producers, according to BOEM data.

Nexen is one of the largest oil producers in the UK North Sea, according to the company’s website, and its holdings include assets in Canada, Nigeria and Trinidad and Tobago. (Reporting by Jessica Resnick-Ault and Ron Bousso; additional reporting by Ayenat Mersie-Ejigu Editing by Leslie Adler)

(c) Copyright Thomson Reuters 2018.

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