CNPC's Overseas Assets Concentrated in Unstable Regions

China National Petroleum Corp. (CNPC) produced nearly all of its overseas output last year from countries deemed to pose a high level of risk, underscoring how state-owned Chinese companies have ventured into dangerous areas in search of resources.

Approximately 94 percent of CNPC's international oil and gas production in 2011 was from regions with "high or extremely high security threats," said Wang Jinsong, deputy director of CNPC's Research Institute of Safety & Environment Technology, on Tuesday.

CNPC increased overseas gas output by nearly one-fifth year-on-year to 17.06 billion cubic meters in 2011, while crude oil output from abroad rose 17.9 percent to 89.38 million tons.

However, January-June production from foreign projects inched up just 0.9 percent from a year earlier, with CNPC noting in its interim report that the "the security of resource-rich countries became more grave" and that "uncertainty with the investment environment in key resource-rich countries increased" over the period.

CNCP is aiming to enlarge its overseas investment portfolio in order to generate half of its revenue from assets abroad by 2015, Tang Tingchuan, director of development strategy at CNPC's Policy Research Office told Interfax earlier this month. The company expects revenue from foreign sources to account for half of total revenue by 2015 and two-thirds in 2020.

Chinese companies backed by Beijing are broadening their exposure to resource-rich but unstable countries, as they hunt for the vast quantities of commodities needed to sustain domestic economic growth.

State-owned CNPC, for instance, has poured billions into war-torn Afghanistan and Iraq, Sudan and Myanmar - where it is building two parallel pipelines in conflict zones. Control Risks, a global risk consultancy, rates the security risk in Afghanistan, Iraq and Sudan as "extreme", meaning they are more dangerous places to do business than either Libya or Nigeria.

These high-risk areas commanded the bulk of CNPC's international human resources. Some 88 percent of CNPC's 19,000 overseas employees were based in these regions at the end of 2011, Wang said at the 2nd International Congress on Quality, Health, Safety and Environment in Oil and Gas in Beijing.

CNPC operated 81 oil and gas projects in 32 countries last year, while also providing oilfield services in 60 countries worldwide, according to Wang.

One of those countries was Libya, which CNPC entered in 2002. In February last year, the state-owned major suspended production and evacuated all 391 employees from the oil-rich nation, after project camps and operating sites were attacked in the early stages of a revolt against Muammar Gaddafi.

CNPC has not set a timetable for resuming projects in Libya, Wang said.

The company plans to increase its local and international headcount in foreign projects, which numbered around 80,000 employees in 2011.