Drive to Tap into China Demand Spurs Partnerships

The Financial Times reports on a slew of new deals which have Western companies cooperating with Chinese partners on various projects around the globe:

Royal Dutch Shell has teamed up with for a joint bid for Arrow Energy, the Australian gas company; Total of France is expected to work with CNOOC to develop Tullow Oil’s assets in Uganda; and has formed a partnership with China National Petroleum Corp to develop the giant Rumaila oil field in Iraq.

The circumstances of each deal are different. In Iraq, for example, where the projects are technically straightforward but have political and security risks, having a Chinese partner provides important benefits to BP.

Samuel Ciszuk of IHS Global Insight says CNPC brings political clout because it is state owned, as well as a “skilled, cheap workforce and a willingness to invest in a low-margin project”.

Yet while these partnerships have a variety of motives, there is often a common ambition behind them; western companies hope to build on their respective relationships to secure greater access to the Chinese market.

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