Q3 2012

National Oil Company Monitor Q3 2012

Table of contents
Partnerships and alliances North and South America Europe, Middle East and Africa Asia and Oceania Privatization and consolidation North and South America Europe, Middle East and Africa Asia and Oceania Government policy developments North and South America Europe, Middle East and Africa Asia and Oceania NOC strategy North and South America Asia-Pacific Sources 3 3 3 4 5 5 6 8 9 9 9 10 11 11 11 13

Asian NOCs step up their pursuit of overseas assets

In the first nine months of 2012, Asian NOCs spent almost $37b acquiring assets outside their home markets, more than double the $16b spent in this area for all of 2011. Approximately 40% of the total this year to date relates to CNOOCs proposed acquisition of Canadian upstream company Nexen Inc. The deal is subject to government and regulatory approvals, but if completed it would represent Chinas largest overseas deal in the energy sector. With a portfolio that includes assets in Canada, Nigeria, the Gulf of Mexico and the UK, CNOOC would further diversify its global operations through the Nexen acquisition.

Dale Nijoka Global Oil & Gas Leader

Following close on the CNOOC deal, China Petrochemical Corporation (Sinopec) announced the acquisition of a 49% stake in the UK operations of Canadas Talisman Energy Inc. The deal effectively creates a UK-based JV between Sinopec and Talisman, which has interests in 46 fields in the UK North Sea. The acquisition marks Sinopecs strategic entry into the offshore UK North Sea region. Elsewhere, PetroChina acquired a 40% stake in Block 4 in Qatar during the third quarter. Additionally, PetroChina has acquired a 67% operating interest in the Australian coalbed methane (CBM) assets of Molopo Energy. And it is not just Chinese companies that are extending their international reach. In September, ONGC Videsh, an overseas arm of Indians Oil and Natural Gas Corp (ONGC), agreed to acquire from Hess Corporation a 2.72% interest in the ACG group of fields in the Azerbaijan sector of the Caspian Sea. The acquisition marks ONGC Videshs entry into the Azerbaijan oil and gas sector. There are no signs that acquisition activity by Asian NOCs will slow in the final quarter of 2012. A number of companies have signaled their intention to acquire additional overseas assets. PetroChina is seeking acquisition opportunities in Central Asia, East Africa, Australia and Canada to raise its international oil and gas production to 50% of its total output in five to eight years.

All currency is US$ unless otherwise stated.

The company has allocated $15.7b for overseas investments in 2012 and aims to pursue acquisitions independently and with its partners. Indian state-owned Oil India Ltd. has allocated $1.3b to acquire both conventional and unconventional overseas energy oil and gas assets in the financial year 201213. Furthermore, Pertamina is seeking to pursue additional upstream deals in Venezuela following its acquisition of Harvest Natural Resources Venezuelan assets this year. The Japanese government has announced that it will aim to phase out the use of nuclear power in the country by 2040. The policy change follows the March 2011 Fukushima Daiichi nuclear power plant disaster and is likely to serve to deepen Japans dependence on oil and gas imports. This means that we may see Japanese energy companies engage in further deals or partnerships to secure access to supplies. While deals to date have focused on shale and oil sands assets, proposed North American LNG export projects are also likely to be prime future targets for Asian investors. While there has been significant Asian investment in North American unconventional plays, there has yet to be an outflow of capital or expertise by companies involved in shale development to other countries. This might begin to change when China holds its second shale gas auction later this year. This time foreign companies will be allowed to partner with Chinese firms. The primary reason for including foreign companies is to benefit from the technology that they have developed for shale gas extraction in the US. The lessons learned from the North American shale gas success story will help accelerate the development of Chinas sizable shale resources.

National Oil Company Monitor Q3 2012

Partnerships and alliances

North and South America
PDVSA closes an agreement over nationalized assets
PDVSA Gas, a subsidiary of Venezuelan NOC Petroleos de Venezuela, S.A. (PDVSA), has agreed to pay US$442m to Exterran Venezuela, a subsidiary of Exterran Holdings Inc., for its nationalized natural gas compression assets. PDVSA had seized these assets under a law passed in 2009 by the Government of Venezuela. According to the deal, PDVSA will pay 40% in cash at the closing of the transaction and the remainder in equal payments over a four-year period. Additionally, the company has agreed to suspend the arbitration proceeding filed by its Spanish subsidiary, Universal Compression International Holdings, against the country at the International Center for Settlement of Investment Disputes (ICSID).1

Europe, Middle East and Africa

Naftogaz, KazMunaiGas eying downstream JV
Ukrainian NOC Naftogaz Ukrainy and Rompetrol Group N.V., a subsidiary of Kazakhstans NOC KazMunaiGas (KMG), have signed a memorandum of cooperation (MoC) to establish a JV to set up and develop a network of fuel retail stations in Ukraine. In addition, the two companies are looking to expand the trans-shipment capacity of crude oil and oil products, enhance fuel quality standards, develop a system of secondary logistics market of petroleum products, and introduce European marketing technologies in Ukraine. The JV will help Naftogaz improve the fuel quality and supply in the Ukrainian market. It will also help Rompetrol to consolidate its presence in Ukraines downstream market.3

Venezuela and Russia sign energy deals

Venezuela and Russia have signed eight new energy-cooperation deals, including an agreement to set up a JV between PDVSA and Russias state oil company OAO Rosneft. Rosneft and Corporacion Venezolana del Petroleo (CVP), a subsidiary of PDVSA, have signed an agreement to establish a JV to develop the Carabobo 2 project in Venezuelas Orinoco Belt. The JV will be known as Petrovictoria, and CVP will hold a 60% interest and Rosneft will hold the remaining 40%. The Carabobo 2 project comprises the Carabobo 2 North and Carabobo 4 West blocks. The Carabobo project holds reserves of 47 billion barrels of oil and is projected to produce 400,000 barrels per day (b/d) of oil by 2020. The two companies also signed a memorandum of understanding (MoU), under which Rosneft will pay a bonus of US$1.1b for the right to develop the block and provide a five-year loan of US$1.5b to CVP. The loan will be issued in tranches, each of no more than US$300m per year at Libor plus 5.5%. The other agreements signed between the two countries include the establishment of JVs to create a drilling company and provide infrastructure construction services and the construction of a 300-megawatt (MW) thermal power plant.2

Rosneft, Itera Group close a JV deal in Russia

Initiated in February 2012, Rosnefts JV with Itera Group to produce and sell natural gas has been finalized. According to the terms of the agreement, Rosneft has obtained 51% in the JV in exchange for a cash consideration of US$173.4m and a 100% stake in the charter capital of Kynsko-Chaselkoye Neftegaz, which owns the license for the Kynsko-Chaselsk Block located in the Yamal-Nenets region of northern Russia. The JV holds proven and probable (2P) reserves of 372.4 billion cubic meters (bcm) of gas and 15.7 million tons of liquid hydrocarbons and is expected to produce approximately 13 bcm of natural gas in 2013. The JV will help both companies to develop and monetize their gas reserves and emerge as a leading independent natural gas producer in the Russian market.4

Rosneft, Statoil finalize JV deals

Rosneft and Norways Statoil have signed shareholder and operating agreements to set up JVs to explore four offshore license areas on the Russian Arctic shelf, which were included in the cooperation agreement signed by the two companies in May 2012.

National Oil Company Monitor Q3 2012

The agreements for all the license areas are similar, in which Rosneft and Statoil will distribute the stakes in the ratio of two-thirds to one-third. Statoil will finance the entire exploration work, which includes the mandatory drilling of six wells during 201621. The JVs will benefit from the application of fiscal reform packages announced by the Russian Government in April 2012 for developing the countrys offshore region. The deal will help Rosneft leverage Statoils technical expertise in offshore operations, while strengthening economic relations between Russia and Norway.5

Asia and Oceania

Gazprom, Japan sign a memorandum on Vladivostok LNG project
Russias state-owned OAO Gazprom and Agency for Natural Resources and Energy, Japan, has signed a memorandum on the Vladivostok LNG project. The memorandum is likely to promote comprehensive cooperation in project development, including the financing and gas marketing aspects. The agreement will help Russia develop its natural gas resources in eastern regions and target the Asia-Pacific market, while it will help Japan in sourcing LNG to fuel its gas demand, which has increased significantly since the Fukushima incident.8

Emirates National Oil Company expands its footprint

State-owned Emirates National Oil Company (ENOC) and Aldrees Petroleum & Transport Services Company (Aldrees) have signed a 50-50 JV agreement to set up service stations across Saudi Arabia. With more than 450 fuel stations in Saudi Arabia, Aldrees is one of the largest petroleum retailers and commodity hauling companies in Saudi Arabia. According to the terms of agreement, the JV is expected to open the first station by early 2013 and will feature all the specialized and popular brands of ENOC. The JV aligns with ENOCs strategy to expand its business presence regionally and will offer enhanced services to Aldrees customers.6

CNOOC signs PSCs with Shell

State-owned China National Offshore Oil Corporations (CNOOC) subsidiary, CNOOC Limited, and Shell have signed two offshore production sharing contracts (PSCs) for Blocks 62/02 and 62/17 in the Yinggehai Basin in the South China Sea. According to the contract, Shell will conduct a 3D seismic survey and drill exploration wells in the blocks at its own expense. Shell will be the operator, and in the event of a commercial discovery, CNOOC has a farm-in right of up to 51%. These PSCs will strengthen the relationship between the two companies and will help CNOOC to build its technical capabilities and accelerate deepwater exploration in the country.9

PetroVietnam and KazMunaiGas sign a MoU on hydrocarbon cooperation

Vietnams state-owned PetroVietnam and KMG have signed a MoU to cooperate in the exploration and production of hydrocarbon resources in an onshore area in the Mangistau region of Kazakhstan. KMG will provide initial exploration services in the area to PetroVietnam, in line with a technical cooperation agreement signed between the companies in July 2012. The two companies will consider negotiating for further work if the initial exploration activities yield positive results. The deal aligns with PetroVietnams strategy to expand its presence in Central Asia and will also strengthen the relationship between Vietnam and Kazakhstan.7

National Oil Company Monitor Q3 2012

Privatization and consolidation

North and South America
Ecopetrol buys a stake in blocks in Brazils Santos Basin
Colombias NOC Empresa Colombiana de Petrleos (Ecopetrol) subsidiary, Ecopetrol leo e Gs do Brasil Ltda., has signed an agreement to acquire a 30% interest in three exploration blocks from Vanco Brasil Explorao e Produo de Petrleo e Gas Natural Ltda. (Vanco Brazil), a subsidiary of PanAtlantic Energy Group, for an undisclosed amount. The three exploration blocks, BM-S-72, BM-S-63 and BM-S-71, are in the Santos Basin, offshore Brazil. PanAtlantic will retain a 40% working interest, while the other partners, Panoro Energy ASA and Brasoil Round 9 Exploracao Petrolifera Ltda., will each retain a 15% interest. The completion of the deal is subject to the approval of the Brazilian oil regulator, National Petroleum Agency (ANP). The deal aligns with Ecopetrols strategy to expand its global asset portfolio to raise production levels to 1 million barrels of oil equivalent per day (boe/d) by 2015 and 1.3 million boe/d by 2020. The deal will also enable the NOC to further strengthen its foothold in Brazil.10

CNOOC to acquire Nexen for US$15.1b

CNOOC Limited, a subsidiary of CNOOC, has entered into a definitive agreement to acquire Nexen Inc. (Nexen) for US$15.1b. According to the terms of agreement, CNOOC will acquire all of the outstanding common shares of Nexen for US$27.50 per share in cash, representing a 61% premium to the closing price of Nexens shares on the New York Stock Exchange on 20 July 2012. Nexens current debt of approximately US$4.3b will remain outstanding. Nexens assets are in Western Canada, the UK North Sea, the Gulf of Mexico (GOM) and offshore Nigeria, and they produced 207,000 boe/d in the second quarter of 2012. As of 31 December 2011, the company has 900 million boe of proven reserves and 1,122 million boe of probable reserves. CNOOC plans to fund the acquisition through existing cash resources and external financing. The transaction is expected to be completed in the fourth quarter of 2012, subject to various government and regulatory approvals.

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The deal marks the largest foreign acquisition by a Chinese company and demonstrates the intent of Chinese NOCs to acquire large oil-weighted assets in countries that have more stable fiscal and regulatory regimes. In addition, the deal is expected to expand CNOOCs overseas presence.11

Europe, Middle East and Africa

OMV expands Norway portfolio
Austrias Osterreichische Mineralolverwaltung (OMV) has signed an agreement to acquire a 15% stake in the Aasta Hansteen field from ExxonMobil. Statoil is the operator of the field with a 75% stake, while ConocoPhillips holds the remaining 10% stake. The Aasta Hansteen field comprises three gas discoveries with expected recoverable reserves of between 40 and 60 million boe and between 0.8 and 1 million boe of condensate. The field is expected to commence production in the fourth quarter of 2016 and is estimated to provide 18,000 boe/d of net production to OMV in 2017. Currently, the field development is in the front-end engineering and design (FEED) phase. Stakeholders are expected to make their final investment decision (FID) in the fourth quarter of 2012. The company has also increased its share in the Norwegian Sea Gas Infrastructure (NSGI) project by 6.15% to 7.9%. The NSGI project is also in the FEED phase. The project scope comprises a 480 km pipeline from the Aasta Hansteen field to the Nyhamna gas processing plant and an expansion of the Nyhamna gas plant. The pipeline will enable a connection to the Linnorm and Zidane fields, where OMV has a 20% stake. The financial details for both deals were not disclosed. The deal aligns with OMVs strategy to enhance its presence in Norway and is its second acquisition in the Northern Norwegian Sea within a year.12

MOL farms into the KazMunaiGas Karpovsky block

Hungarys Magyar Olaj (MOL) has signed a share purchase agreement with JSC KazMunaiGas Exploration and Production (KMG EP), a subsidiary of Kazakhstans NOC KMG, to acquire a 49% stake in the North Karpovsky block for an undisclosed amount. The North Karpovsky block is in northwest Kazakhstan and covers an area of 1,670 sq km and is estimated to hold total potential recoverable reserves of 240 million boe. The two companies plan to form a JV

National Oil Company Monitor Q3 2012

to conduct further exploration work in the block, which includes the drilling of two deep pre-salt exploration wells. The completion of the deal is subject to the approval of the Ministry of Oil and Gas in Kazakhstan, the waiver of state priority right, and approval of the Kazakh and the European Union (EU) antimonopoly bodies. The deal may result in operational synergies as the block is near the Fedorovsky block, where a gas-condensate discovery was made in 2008 and KMG EP holds a 50% stake in the Fedorovsky block with MOL holding a 27.5% stake. While the deal will allow MOL to expand its footprint in Kazakhstan, it will allow KMG EP to share exploration risks and financial obligations with MOL.13

PetroChina acquires 40% in Qatars Block 4

State-owned Qatar Petroleum has signed an agreement permitting PetroChina, a subsidiary of NOC China National Petroleum Corporation (CNPC), to acquire a 40% stake of the exploration and production rights from GDF Suez under Qatars exploration and production sharing agreement (EPSA) for Block 4. The financial details of the deal were not disclosed. The offshore block is near the North Field and covers 2,500 sq km at water depths of up to 75 meters. GDF Suez will continue to operate the block with its 60% stake. The deal will expand PetroChinas presence in Qatar and is likely to aid China in securing further LNG supplies from the country.15

Chinese NOCs acquisitions in Europe and the Middle East

Sinopec purchases a 49% stake in Talisman UK
Sinopec International Petroleum Exploration & Production Corporation (SIPC), a wholly owned subsidiary of Chinese NOC China Petrochemical Corporation (Sinopec), has signed an agreement to acquire a 49% stake in Talisman Energy (UK) Limited (TEUK) from Talisman Energy Inc. (Talisman) for US$1.5b, including working capital adjustments. The deal effectively makes TEUK a JV between Sinopec and Talisman, which has interests in 46 fields in the UK North Sea and operates 11 offshore installations and an onshore terminal. Sinopec plans to appoint new personnel for its key positions within the JV, while TEUK will operate the assets. In addition, the JV plans investment to improve the ongoing operating performance of the TEUK assets and facilitate infill drilling, exploration opportunities and major projects, which will help defer decommissioning and extend field life. The deal is expected to be completed by the end of 2012, subject to various government and regulatory approvals. The deal marks Sinopecs strategic entry into the offshore UK North Sea region. In addition, the sale is a part of Talismans strategy to reduce its working interest and capital spending in the UK by approximately half to fund growth areas within its remaining portfolio.14

National Oil Company Monitor Q3 2012

OVL acquires a stake in Azerbaijans oilfield

ONGC Videsh Ltd. (OVL), an overseas arm of Indian NOC Oil and Natural Gas Corp (ONGC), has signed definitive agreements for the acquisition of a 2.72% interest in the Azeri, Chirag and the deepwater portion of Guneshli (ACG) group of fields in the Azerbaijan sector of the Caspian Sea from Hess Corporation (Hess) for US$1b. The BP plc-operated ACG field is in the south Caspian Sea and is producing an average of 700,000 b/d of crude oil. The acquisition of Hess stake in the ACG field will augment OVLs proved reserves by 9%. As a part of deal, the company has also purchased a 2.36% interest in the Baku-Tbilisi-Ceyhan Pipeline (BTC) from Hess. The 1,768 km BTC pipeline is the main export outlet for ACG production and has the capacity to transport 1 million b/d of crude oil to the Ceyhan terminal in southeast Turkey. The deal is expected to conclude in the first quarter of 2013, subject to relevant government and regulatory approvals. The acquisition marks OVLs entry into Azerbaijan and expands its overseas upstream portfolio. It also aligns with Hess strategy to divest mature and small working interest assets to fund its shale gas operations in the US.16

Asia and Oceania

PetroChina buys Australian CBM asset
PetroChina International Investment Company Limited (PIIC), a subsidiary of PetroChina, has acquired a 67% operating interest in coalbed methane (CBM) assets from Molopo Energy for US$45.6m (AUD43.4m),* including the adjustment of working capital. Mitsui holds the remaining 33% interest in its CBM assets. The CBM assets cover an area of 1,370 sq km over five projects, in Queenslands Bowen basin. The completion of the deal is subject to the approval of the Australian Foreign Investment Review Board (FIRB) and the Chinese National Development and Reform Commission (NDRC). The acquisition will help PetroChina to build its technical capabilities to develop unconventional resources and secure gas supply for its upcoming LNG project in Australia in partnership with Liquefied Natural Gas Ltd.17

*($1=AUD0.94597) as of 6 August 2012.

National Oil Company Monitor Q3 2012

Government policy developments

North and South America
Argentina establishes commission to regulate oil and gas industry
The Argentinean Government has introduced Decree 1277/2012, which mandates the creation of the Planning and Strategic Coordination Commission to regulate the oil and gas industry. This decree follows Law 26,741 enacted by the Argentine Congress on 4 May 2012. It authorized the expropriation of 51% of the shares of YPF from Repsol S.A. Axel Kicillof, the serving Secretary of Political Economy in the Ministry of the Economy, has been named as the Head of the Commission. He is supported by the Secretary of Commerce, Guillermo Moreno, and the Secretary of Energy, Daniel Cameron, as team members. The new commission will promote investments in the oil and gas industry and set reference prices for oil and gas sales. It will also be in charge of the National Registry for the Hydrocarbon Investment program, which requires the registration of oil and gas companies to operate in the country. The registered companies will have to submit their annual investment plans to the commission by 30 September of each year. The investment plans need to be in line with targets set by the commission. Non-compliance could result in fines or sanctions, including the removal of concessions. The commission will conduct quarterly audits of the companies investment plans to ensure compliance with the state directives. The new decree will enable the government to monitor investment in the oil and gas industry, which is expected to stem the fall in oil and gas production.18

Europe, Middle East and Africa

Algeria amends law to develop shale gas resources
The Algerian Council of Ministers has approved amendments to the 2005 hydrocarbons law to attract investment in the energy sector and encourage development of unconventional and difficult-to-access reserves. The amended law will apply to new developments and is aimed to attract foreign investments into the unconventional hydrocarbon sector. Algerias NOC Sonatrach estimates the country holds 600 trillion cubic feet (tcf) of recoverable shale gas reserves. In addition, the law awards Sonatrach exclusive right to transport crude oil via pipelines and ensures the company a majority stake in JVs with foreign oil companies. The amended bill will help Algeria develop its unconventional reserves and offset the decline in its natural gas production.20

Egypt appoints a new petroleum minister

Egypts Prime Minister, Hisham Qandil, has appointed Osama Kamal as the Petroleum Minister, replacing Abdullah al-Ghorab. The new minister is the former Chairman of the Egyptian Petrochemicals Holding Company. Previously, he has worked for Engineering for Petroleum and Process Industries and Petrojet, an affiliate of the Egyptian General Petroleum Corporation (EGPC).21

South Africa lifts the shale moratorium

The Government of South Africa has lifted the moratorium for shale gas exploration in the Karoo region after a government-funded report found no environmental implications in hydraulic fracturing, a process used for shale gas exploration. The moratorium was imposed in April 2011 and was extended twice after opposition from environmentalists and local communities. The Cabinets endorsement of the Department of Mineral Resources (DoMR) recommendation would facilitate foreign investment in the countrys shale resources. However, details of how the moratorium will be lifted have yet to be announced. As such, the DoMR intends to hold public consultations on the lifting of this moratorium and share the proposed action for processing new licenses.22

Brazilian President approves the 11th licensing round

Brazilian President Dilma Rousseff has approved the 11th bidding round for oil and gas concessions, which will be held in May 2013. It is expected that the round will include 174 blocks outside the pre-salt layers, half of which are onshore. In addition, the country plans to conduct the first bidding round for exploration rights for its sub-salt offshore blocks in November 2013, which will follow the new PSC model. However, the auctions are still subject to the congressional approval of a new royalty law. The proposed bidding rounds will help increase exploration activities and attract foreign investments in the country. The last auction round was held in 2008.19

National Oil Company Monitor Q3 2012

Asia and Oceania

Bangladesh approves licensing round and PSC terms
The Government of Bangladesh has approved a plan to conduct a new bidding round in October 2012, under which 12 offshore gas blocks (nine in shallow water and three in deep water) will be offered for exploration in the Bay of Bengal. In addition, the country plans to offer two discovered shallow-water fields for exploration in conjunction with two of the 12 undiscovered gas blocks. The two blocks, Kutubdia and Teknaf, together hold recoverable gas reserves of 320.5 tcf. Petrobangla will get an additional 5% of profits from the gas produced from these two fields. Further, Bangladeshs Cabinet Committee on Economic Affairs has approved the terms for the PSC model, allowing a 72% increase in the sales prices of gas produced from the offered blocks to US$5 per million cubic feet (mmcf) from US$2.902.95 per mmcf. The improved PSC terms will help Bangladesh attract international oil companies to participate in the upcoming licensing round and leverage their technical expertise to explore untapped hydrocarbons in the Bay of Bengal.23

and infrastructure and US$159.7m for drilling. The field is expected to start production in the second quarter of 2015 and will produce 116 mmscfd of natural gas at the peak production level. In addition, the regulator has approved Chevron Indonesias proposal for the second phase of development of the Sapi field in east Kalimantan. The fields peak production target is 266 b/d of oil, 7.29 mmscfd of natural gas and 153 mmscfd of liquefied petroleum gas. The development will cost US$157.54m and production could begin this year.24

China offers 20 blocks in the second shale gas round

China has launched its second shale gas bid round by offering 20 blocks in October. The offered blocks cover an area of 20,002 sq km spanning eight provinces, including five in Guizhou and Hunan each, three in Chongqing, two each in Hubai and Henan, and one each in Jiangxi, Anhui and Zhejiang. According to the terms of the bidding round, the bidders can bid for a maximum of two blocks and should have registered capital of more than US$47.3m (CNY300m).** In addition, the country has allowed foreign companies to submit bids via JVs with Chinese companies, provided the Chinese company has a controlling stake. The participation of foreign companies would allow China to leverage their technological expertise to develop its domestic shale gas reserves. According to the US Energy Information Agency (EIA) estimates, China holds 36 trillion cubic meters (tcm) of recoverable shale gas reserves. The country plans to produce 6.5 bcm of shale gas per year by 2015.25

Indonesian regulator approves 12 field development plans

Indonesias oil and gas regulator, the Upstream Oil and Gas Executive Agency (BPMIGAS), has approved plans to begin the development of 12 oil and gas fields. According to BPMIGAS estimates, the development of the fields would require the investment of approximately US$830m. Apart from 12 approved plans, the regulator has rejected five plans, and 22 are still under review. The approved fields are expected to start production between 2012 and 2014 and will produce a combined 14,000 b/d of oil and 150 million standard cubic feet per day (mmscfd) of natural gas. The approved projects include the Kepodang field, which holds 480 billion cubic feet (bcf) of natural gas. Petronas Carigali Muriah, a subsidiary of Malaysias state-owned Petroliam Nasional Bhd (Petronas), operates this field. The company will invest US$385.3m for the construction

**($1=CNY6.33035) as of 28 September 2012.

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National Oil Company Monitor Q3 2012

NOC strategy
North and South America
Petrobras seeks a partner for GOM operations
Brazilian state-owned Petrleo Brasileiro (Petrobras) is seeking a partner to invest approximately US$4b in its deepwater drilling operations in the lower tertiary region of the US GOM. Petrobras plans to sell around half of its stakes in the offshore fields, Cascade and Chinook. The company holds a 100% stake in Cascade and a 66.67% stake in Chinook. The plan aligns with Petrobras investment intentions to sell some of its overseas assets to raise US$15b to fund its five-year investment plan to develop its offshore assets in Brazil.26

Asia-Pacific
Pertamina seeks Venezuelan assets
Indonesias state-owned P T Pertamina (Persero) seeks to pursue further upstream deals in Venezuela, following its US$725m acquisition of Harvest Natural Resources assets in June 2012. The company has allocated nearly US$1.1b (10 trillion rupiah) for acquiring overseas assets in 2012 to offset declines in domestic oil production. Currently, Indonesia is importing between 300,000 b/d and 400,000 b/d of crude oil to meet its domestic demand and seeks to strengthen ties with resource-rich countries.27

Petronas announces leadership changes

Petronas Board of Directors has appointed Tan Sri Mohd Sidek Hassan as its Chairman. Prior to this, he was working as the Chief Secretary to the Malaysian Government. His appointment will help Petronas differentiate the roles of the Chairman and President and CEO.28

PetroChina seeks acquisitions overseas

PetroChina is seeking acquisition opportunities in Central Asia, East Africa, Australia and Canada to raise its overseas oil and gas production to 50% of its total output in five to eight years. Currently, overseas production contributes 9% of its total production. The company has allocated US$15.7b (CNY100 billion) for overseas investments in 2012 and aims to pursue overseas acquisitions independently and with its partners.

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The overseas expansion will help PetroChina meet the rising domestic demand for energy and strengthen its international presence. It will also help offset the companys losses from the downstream business due to controlled pricing for petroleum products in China.29

OIL plans for overseas acquisition

Indian state-owned Oil India Ltd. (OIL) has allocated US$1.3b (INR 70b)*** for the acquisition of overseas energy assets in the financial year 201213. According to OILs Head of Finance TK Ananth Kumar, the company intends to buy both conventional and unconventional assets and is in the advanced stages of finalizing an acquisition. However, the company did not disclose additional information on the deal.30

CNOOC offers 26 blocks in China for foreign cooperation

CNOOC has offered 26 offshore blocks for development with foreign companies. The blocks cover a total area of 73,754 sq km, with 22 blocks located in South China Sea, one in Bohai Bay and the remaining three in the East China Sea. Foreign companies can access data packages until 30 November 2012. Previously, the company had offered nine blocks in the South China Sea for foreign companies participation in June 2012. The blocks covered a total area of 160,124 sq km. However, the offered blocks were contested by Vietnam.31

Indian companies to invest US$3b in Venezuela

Indian state-owned oil companies plan to invest US$3b in oil and gas fields in Venezuela, making it one of the largest overseas investments. A consortium of state-run Indian companies led by OVL plans to invest US$2.2b in the Carabobo-1 heavy oil project, in which ONGC already holds an 11% stake. Indias other state-owned companies Indian Oil Corp and Oil India Ltd. each hold a 3.5% stake. Additionally, OVL intends to invest US$500m in the San Cristobal oil field, in which it holds a 40% stake. The company has already invested US$350m in the project.32

***($1=INR55.2416) as on 12 September 2012.

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National Oil Company Monitor Q3 2012

Sources
1. enezuela reaches amicable agreement with Exterran, PDVSA press release, http://200.5.41.133/index.php?tpl=interface. V en/design/salaprensa/readnew.tpl.html&newsid_obj_id=10342&newsid_temas=1, 11 August 2012; Exterran Completes Sale of Nationalized Venezuelan Assets For US$442m, Dow Jones Business News, 8 August 2012, via Factiva 2012 Dow Jones & Company, Inc. 2. DVSA and Russian consortium start production at extra-heavy oil project, IHS Global Insight Daily Analysis, P 1 October 2012, via Factiva 2012 IHS Global Insight Limited; UPDATE 2: Venezuelas PDVSA, Russias Rosneft ink deals on Carabobo 2, Platts Commodity News, 28 September 2012, via Factiva 2012 Platts; Russia, PDVSA ink JV creation deal for developing Carabobo-2 block in Venezuela (Part 2), Interfax: Russia & CIS Business and Financial Newswire, 28 September 2012, via Factiva 2012 Interfax Information Services, B.V. 3. aftogaz Ukrainy, Rompetrol in Talks on Potential Retail Fuel JV in Ukraine, IHS Global Insight Daily Analysis, 17 July 2012, N via Factiva 2012 IHS Global Insight Limited; Naftohaz Ukrainy And Rompetrol Exploring Possibility Of Joint Venture For Developing Network Of Gasoline Filling Stations, Ukrainian News, 16 July 2012, via Factiva 2012 Ukrainian News Agency. 4. osneft and ITERA Group Close Deal to Create Joint Venture to Produce and Sell Gas, Rosneft press release, R http://www.rosneft.com/news/pressrelease/06082012.html, 6 August 2012; Rosneft and Itera Group Close JV Gas Deal in Russia, IHS Global Insight Daily Analysis, 7 August 2012, via Factiva 2012 IHS Global Insight Limited 5. osneft and Statoil sign shareholder agreements for Russian offshore exploration joint ventures, Rosneft press release, R http://www.rosneft.com/news/pressrelease/30082012.html, 30 August 2012. 6. nited Arab Emirates : ENOC and Aldrees sign joint venture to establish service stations in Saudi Arabia, Meena Report, U 4 September 2012, via Factiva 2012 Provided by Syndigate.info. 7. azakhstans KazMunaiGaz, PetroVietnam sign MOU on hydrocarbon cooperation, Platts Commodity News, K 11 September 2012, via Factiva 2012 Platts. 8. azprom and Japans Agency for Natural Resources and Energy sign Memorandum on Vladivostok-LNG project, G Gazprom press release, http://www.gazprom.com/press/news/2012/september/article143512/, 8 September 2012. 9. NOOC Signed PSCs with Shell, CNOOC press release, http://www.cnoocltd.com/encnoocltd/newszx/news/2012/2078. C shtml, 25 July 2012. 10. copetrol to Take Stakes in Blocks in Brazils Santos Basin, IHS Global Insight Daily Analysis, 19 July 2012, via Factiva, E 2012 IHS Global Insight Limited; PanAtlantic Energy Group; Ecopetrol and PanAtlantic Sign Farm-out Agreement in the Santos Basin, Offshore Brazil, Energy Weekly News, 3 August 2012, via Factiva, 2012 Energy Weekly News via VerticalNews.com. 11. NOOC Limited Enters Into Definitive Agreement to Acquire Nexen Inc., CNOOC press release, http://www.cnoocltd.com/ C encnoocltd/newszx/news/2012/2062.shtml, 23 July 2012; China : CNOOC Limited Enters Into Definitive Agreement to Acquire Nexen Inc., Mena Report, 24 July 2012, via Factiva, 2012 Provided by Syndigate.info, an Albawaba.com Company.

National Oil Company Monitor Q3 2012

13

12. ustrias OMV to take 15% stake in Norwegian Sea gas field, Platts Commodity News, 13 July 2012, via Factiva 2012 A Platts; OMV Acquires 15% Stake in Aasta Hansteen from ExxonMobil, Gulf oil & gas, 13 July 2012, via Factiva 2012 Universal Solutions S.A.E. 13. MG EP sells 49% stake in northwest Kazakh oil, gas block to Hungarys MOL, Platts Commodity News, 19 July 2012, K via Factiva 2012 Platts; Hungarys MOL buys Kazakh exploration license, Kazakhstan Newsline, 23 July 2012, via Factiva 2012 Check Point Central Asia. 14. alisman to sell 49% of UK North Sea assets to Sinopec, Platts Oilgram News, 24 July 2012, via Factiva 2012 T McGraw-Hill, Inc.; Talisman Energy Sells 49% Equity Interest in UK North Sea Assets for US$1.5b, Talisman press release, http://www.thepressreleasewire.com/client/talisman_energy/release.jsp?actionFor=1643553&year=2012&releaseSeq=6, 23 July 2012. 15. atar Petroleum signs agreement with GDF SUEZ and PetroChina relating to Qatars Block 4 EPSA, Qatar Petroleum press Q release, http://www.qp.com.qa/en/homepage/mediacentre/news/12-07-26/Qatar_Petroleum_signs_agreement_with_GDF_ SUEZ_and_PetroChina_relating_to_Qatar_s_Block_4_EPSA.aspx, 25 July 2012; PetroChina Takes 40% Stake in GDF Suezs Offshore Block 4 in Qatar, IHS Global Insight Daily Analysis, 26 July 2012, via Factiva 2012 IHS Global Insight Limited. 16. ndias OVL acquires Hess stake in Azerbaijans ACG Consortium, BTC Pipeline for USD1 Bil, IHS Global Insight Daily I Analysis, 10 September 2012, via Factiva 2012 IHS Global Insight Limited; ONGC Videsh signs definitive agreements, OVL press release, http://www.ongcvidesh.com/NewsContent.aspx?ID=928, 08 September 2012; OVL buys Hess stake in ACG oil fields in Azerbaijan for US$1 bn, Press Trust of India, 8 September2012, via Factiva 2012 The Press Trust of India Limited. 17. etroChina International to acquire 67% interest in coalbed methane assets in Queensland, Australia from Molopo Energy P for US$45.6m, GlobalData Financial Deals Tracker, 6 August 2012, via Factiva 2012 GlobalData; PetroChina upgrades Australia unconventional gas investment, RIA Oreanda-News, 10 August 2012, via Factiva 2012 RIA OREANDA. 18. rgentine Government to Require Oil Companies to Submit Annual Investment Plans for Approval, IHS Global Insight A Daily Analysis, 30 July 2012, via Factiva, 2012 IHS Global Insight Limited; Argentina Creates Commission to Regulate Hydrocarbons Sector, IHS Global Insight Daily Analysis, 5 September 2012, via Factiva, 2012 IHS Global Insight Limited; UPDATE 1-Argentina tightens control over energy industry, Reuters News, 27 July 2012, via Factiva 2012 Reuters Limited; Regulation Of The New Hydrocarbons Sovereignty Regime, Mondaq Business Briefing, 7 August 2012, via Factiva 2012 Mondaq Ltd. 19. razils Oil & Gas Round 11 Announced For May 2013, Mondaq Business Briefing, 20 September 2012, via Factiva 2012 B Mondaq Ltd.; UPDATE: Brazil plans 11th E&P bid round in 2013; oil royalty law must pass first, Platts Commodity News, 18 September 2012, via Factiva 2012 Platts; Rousseff backs an 11th round, Upstream, 21 September 2012, via Factiva 2012 Upstream. 20. lgeria Approves Changes in Hydrocarbons Law to Attract Investments in Non-Conventional Oil and Gas, IHS Global Insight A Daily Analysis, 19 September 2012, via Factiva 2012 IHS Global Insight Limited; Algerian cabinet approves modified hydrocarbon law: presidents office, Platts Commodity News, 18 September 2012, via Factiva 2012 Platts.

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National Oil Company Monitor Q3 2012

21. gyptian Petroleum Minister Named, IHS Global Insight Daily Analysis, 2 August 2012, via Factiva 2012 IHS Global E Insight Limited; New Egypt oil minister from petrochemicals, Platts Oilgram News, 2 August 2012 2012 McGraw-Hill, Inc. 22. outh Africa Lifts Moratorium on Shale Gas Licences, IHS Global Insight Daily Analysis, 10 September 2012, via Factiva S 2012 IHS Global Insight Limited; South Africa Lifts Fracking Ban, LNG Intelligence, 10 September 2012, via Factiva 2012 Energy Intelligence Group. 23. angladeshi Government Approves PSC Terms for Next Offshore Licensing Round, IHS Global Insight Daily Analysis, B 13 September 2012, via Factiva 2012 IHS Global Insight Limited; Bangladesh poised to launch licensing round, Upstream, 14 September 2012, via Factiva 2012 Upstream. 24. PMigas Approves 12 Oil and Gas Projects, The Jakarta Globe, 14 August 2012, via Factiva 2012 PT Jakarta Globe B Media; Indonesias BPMIGAS Approves Development of 12 Oil and Gas Fields, IHS Global Insight Daily Analysis, 15 August 2012, via Factiva 2012 IHS Global Insight Limited. 25. hina to auction 20 shale gas blocks In October 2012, M2 Presswire, 28 September 2012, via Factiva 2012 M2 C Communications; World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, U.S. Energy Information Administration website, http://www.eia.gov/analysis/studies/worldshalegas/, accessed 30 September 2012. 26. orporate News: Petrobras Seeks Partner Off U.S., The Wall Street Journal, 10 September 2012, via Factiva 2012 Dow C Jones & Company, Inc.; Petrobras Seeks Partner for Deep-Water Gulf Operations, The Wall Street Journal, 8 September 2012, via Factiva 2012 Dow Jones & Company, Inc. 27. ertamina Eyes More Venezuelan Assets, International Oil Daily, 3 July 2012, via Factiva 2012 Energy Intelligence P Group Inc. 28. ETRONAS ANNOUNCES APPOINTMENT OF CHAIRMAN OF ITS BOARD, CHANGES IN SENIOR MANAGEMENT, P ENP Newswire, 4 July 2012, via Factiva 2012 Electronic News Publishing. 29. PDATE: PetroChina Seeks Acquisitions in C Asia, E Africa, Australia, Canada, Dow Jones Global Equities News, U 23 August 2012, via Factiva 2012 Dow Jones & Company, Inc. 30. IL sets aside Rs 70 bln for acquisition of overseas energy assets, India Public Sector News, 12 September 2012, O via Factiva 2012 Contify.com 31. nooc Offers 26 Offshore Blocks to Foreign Partners, Dow Jones Global News Select, 28 August 2012, via Factiva 2012 C Dow Jones & Company, Inc.; CNOOC opens 2nd batch 26 offshore oil, gas blocks for foreign cooperation, Xinhua China Oil, Gas & Petrochemicals, 28 August 2012, via Factiva 2012 Xinhua News Agency. 32. il firms plan to invest US$3b in crude-oil production projects in Venezuela, India Public Sector News, 12 July 2012, O via Factiva 2012 Contify.com; 2nd UPDATE: India State Oil Companies to Invest Nearly US$3b in Venezuela, Dow Jones Business News, 12 July 2012, via Factiva 2012 Dow Jones & Company, Inc.

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