Cnooc Ltd.’s takeover bid for Canadian oil producer Nexen Inc. signals a “wise and justified” focus on energy security by China, the International Energy Agency’s chief economist said.
State-run Cnooc agreed on July 23 to pay $15.1 billion in cash to acquire Nexen, operator and 43 percent owner of the Buzzard field, which plays a role in setting benchmark North Sea crude. Oil prices, already too high for the global economy, may advance further once the European debt crisis ends, making China’s pursuit of supplies a “well-justified and wise policy,” IEA Chief Economist Fatih Birol said.
“After the crisis is over we may well see much higher prices than now, and oil security will be a significant problem,” Birol said today in an interview on Bloomberg Television’s “The Pulse” with Maryam Nemazee. “Imports will increase, and China is trying to secure those supplies.”
Brent crude traded at about $103 a barrel on the London-based ICE Futures Europe exchange today.
Such a level is “far too high for the fragile economic situation” in Europe and the U.S., Birol said. The Paris-based IEA advises oil-consuming nations on energy policy. High crude prices are also contributing to a slowdown in economic expansion in China, which will account for 40 percent of this year’s fuel demand growth, he said.
Cnooc’s purchase of Nexen is a “justified acquisition” within a free market, Birol said.