Report: China’s Nexen plans Gulf of Mexico exit

Nexen Petroleum reportedly plans to divest its stake in the Gulf of Mexico.

Offshore staff

NEW YORK/LONDON – Nexen Petroleum, a unit of China’s CNOOC Ltd., plans to divest its stake in the Gulf of Mexico as trade tensions between the US and China mount, according to a Reuters report.

According to the report, Nexen has not determined whether it will sell the assets outright or swap offshore acres with another company. One source indicated that the decision to pull out of the Gulf was due to rising trade tensions between Washington and Beijing.

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% 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 b/d of oil and 50 million cubic feet of natural gas a day.

Nexen also has a 21% 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 boe/d and probable reserves of 700 MMboe.

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

Reuters reports that 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.

09/25/2018

More in Regional Reports