China Oilfield Services Ltd encountered a setback in its first
overseas acquisition after the Russian government rejected its
takeover of a local counterpart.
COSL, Asia's largest oilfield services provider, planned to
acquire STU from Russia's TNK-BP for US$10 million. The purchase
was seen as a small but important step to help COSL expand into the
massive US$10 billion Russian drilling service market.
The two firms had agreed on the acquisition, which had also
gained approval from the Chinese government, but the plan fell to
pieces at the final phase.
"The Russian government didn't tell us the reason for the
rejection, and we won't continue with the acquisition plan," said
Chen Weidong, executive vice president of the dominant Chinese oil
drilling service provider.
"The project involved only US$10 million, so the failure had no
impact on our business. We are working on other bigger projects
with foreign companies," Chen said without revealing details.
The Shanghai-listed company gained 3.12 percent to 29.10 yuan
yesterday.
"Many countries, including Russia, have a tight grip on
energy-related industries as the resources are non-renewable, so
it's hard for foreign companies to tap into the local market," said
Orient Securities analyst Wang Jing.
COSL, an arm of top Chinese offshore oil producer CNOOC Group,
is a leading global integrated oil services firm. It earned 604
million yuan in third-quarter net profits last year.
(Shanghai Daily January 25, 2008)
