From Ernst & Young's Energy Executive Insight Session: Opportunity Abounds for US O&G and China

HOUSTON, Oct. 13, 2011 /PRNewswire/ -- Having imported 60% of its fossil fuels in 2010, China is aggressively pursuing partnerships to support future fuel supply. China's most recent and significant investments in the Americas have focused on Canadian oil sands and offshore Brazil. However, interest in US investment is increasing.

Ernst & Young recently held its annual Energy Executive Insight Session. Dr. Robert Lawrence Kuhn, international corporate strategist, investment banker, author and leading geopolitical expert on China, and a panel of oil and gas industry leaders discussed the opportunity China presents for energy producers, how to partner with Chinese National Oil Companies, and opportunities and strategies for American companies to invest in China.

"It is very clear we can look to China as a real source of opportunity. The Chinese are very interested in working with the US to create a strong bond and a winning relationship," said Marcela Donadio, Americas Oil & Gas Leader, Ernst & Young LLP and panel moderator.

Access to foreign reserves and progress against China's 12th Five-Year Plan (2011-2015) — the initiatives guiding the country's economic growth — are key performance indicators that Chinese oil companies are measured against. Understanding these goals will lead to better partnerships.

"International companies doing business in or with China should seek alignment with the strategies and policies of China's leaders. Seek complementary interests with Chinese partners or business allies which can use your company, resources and products to bolster their own competitive positions in the market," said Dr. Robert Lawrence Kuhn.

For many companies, Chinese investments could provide some much-needed operating capital for cash-strapped developments. Additionally, while the Chinese national oil companies own their own service companies, there is an opportunity for oilfield service companies to provide high-tech services they do not currently have. This is a growing opportunity, particularly as China looks to develop their shale resources.

In addition to the development of unconventionals, China is making big investments in the alternative energy industry. Chinese companies have been very visible and aggressive in shoring up alternative energy capabilities in order to reduce pollution and carbon emissions.

Alternative energy is vital to the energy mix in accommodating China's growing energy demand. "China's rapid growth has led to a rise in energy demand of all types [of energy] over the past decade," said Raymond Ng, China's Oil & Gas Leader for Ernst & Young.

Clearly, China has ambitions to be among the world leaders. To fuel that ambition, the country will need energy both from domestic sources and imports. China will undoubtedly continue to increase its relevance in the global marketplace and demand for fossil fuels, providing many opportunities for oil and gas companies.  

"China is here to play and is determined to be a global player when it comes to energy," said Donadio.

For more information on China's oil and gas investment, read Ernst & Young's latest report entitled Fueling the dragon: China's investment in the global oil and gas market by visiting www.ey.com/us/oilandgas.

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