ExxonMobil’s partner in Guyana’s offshore Stabroek Block, CNOOC, has been placed by the US on a list of companies with ties to the Chinese military.
Reuters yesterday reported that the Chinese state-owned oil company China National Offshore Oil Corporation (CNOOC) said it was aware of its inclusion on a U.S. Defense Department list of companies linked to the Chinese military and would continue to follow up the move.
S&P Global yesterday reported that the US Department of Defense (DOD) added CNOOC’s international oil trading arm to a list of companies allegedly supporting the Chinese military, according to a notice filed with the Federal Register Jan. 7.
The Deputy Secretary of Defense determined that the entities listed in the notice qualify as “Chinese military companies,” the document said, which provide commercial services or goods to support the People’s Liberation Army or related organizations.
According to S&P Global, market participants said the move signals an escalation in US-China tensions although the immediate impact on petroleum trading and shipping is unclear and traders were still assessing the situation ahead of the new US administration under Donald Trump.
It said that a blacklist is different from the Specially Designated Nationals list compiled by the US Department of the Treasury’s Office of Foreign Assets Control that previously impacted oil and gas/LNG trade flows or shipping companies by penalizing violation of sanctions on Iran or Russia.
However, the report said that a DOD blacklist targets companies that impact national security and is likely to disrupt business similar to how Chinese technology company Huawei was impacted, market participants said. It could also result in higher operational costs, compliance issues and reputational damage.
CNOOC trading
The document lists state-owned CNOOC and its subsidiaries CNOOC China Ltd. and CNOOC International Trading Co. Ltd among others.
CNOOC International Trading is based in Hainan. Various US departments have previously listed the parent company CNOOC as an entity supporting China’s military but the oil trading arm has not been directly targeted before, S&P Global said.
CNOOC International Trading, including its operations in Singapore’s commodity trading hub, is among the largest traders of crude oil, refined products and petrochemicals. A separate trading entity under CNOOC Gas and Power handles LNG trading.
CNOOC is one of China’s three largest NOCs and the country’s largest offshore oil and gas field producer and operator focused on upstream oil and gas production, the report said.