A CNOOC oil exploration platform in the Bohai Sea off the east coast of China. The company will gain a working interest in six deepwater exploration wells in the Gulf of Mexico via a joint venture with Nexen Inc. [Photo/ Bloomberg News]

Deal is part of State resource giant's effort to expand portfolio

BEIJING - China National Offshore Oil Corp Ltd (CNOOC) has established a joint venture with Canada-based Nexen Inc in the Gulf of Mexico, a move that follows the nation's biggest offshore oil company's completion of its purchase of oil sands producer Opti Canada Inc for $2.1 billion on Monday.

Via the joint venture, CNOOC will gain a working interest in six deepwater exploration wells in the Gulf of Mexico. It will have a 20 percent working interest in Kakuna, Angel Fire and Cypress, and working interests of 10 to 25 percent in three other exploration wells, according to a statement from Nexen on Wednesday.

Nexen didn't reveal the investment amount. CNOOC also declined to disclose further information when contacted by China Daily, saying that Nexen would operate the wells.

"Given the limited working interests in the exploration wells and the small scale of the projects, CNOOC's move is mainly for strategic purposes to further expand its business in the Gulf of Mexico, which is also important for CNOOC's global investment portfolio," said Zhou Xiujie, industry analyst at China Investment Consulting.

In 2009, CNOOC bought small stakes in oil assets from Norway's oil giant Statoil in the Gulf of Mexico, achieving its first presence in the area.

CNOOC is one of the most active State-owned oil companies in acquiring overseas assets. Its Opti deal added 195 million barrels of proven reserves to the company.

Nexen is Opti's partner in the Long Lake oil sands project in Canada.

In early November, the company failed to reach an agreement on a $7.06 billion deal to buy BP PLC's stake in Argentina-based oil company Pan American Energy LLC for legal reasons. Analysts said this would likely cut CNOOC 's oil production growth in 2012.

According to the company's 2011 strategy outlook, released in January, its cooperation project with Chesapeake Energy Corp in the US and the Bridas project in Argentina are the major overseas projects for this year.

The oil spill in the Penglai 19-3 field in Bohai Bay, in which CNOOC owns a 51 percent stake - has led the Beijing-based company to cut its output increase target to about 6 percent. Its output in 2010 was 329 million barrels.

Credit Suisse said in a research note that after the failed Bridas deal, CNOOC will continue to monitor global asset opportunities.

"The (company's) ongoing focus on domestic deepwater exploration and domestic unconventional gas will provide the next leg of value accretive growth," the report said.