Many Americans are well aware of the struggle the oil and gas industry has faced over the past year. While the price of oil reached $100 per barrel for part of 2014, it now sits at well below half that number, according to research from Bloomberg Business. And, to be sure, there are multiple reasons for the rapid decline, from soaring supply, both domestically and worldwide, as well as lagging demand.
But as the United States witnesses the partial deterioration of one of its strongest industries, other international players instead see a potentially lucrative business opportunity. One key nation, in fact, has taken significant steps toward acquiring oil and gas interests in Texas in efforts to make profits during any future upswings in price.
China Shows Interest in Purchasing Texas Oil and Gas Interests
United States foreign policy has, for many decades, retained a certain wariness toward China. To be sure, as the former continues to view the latter as a significant threat, at least economically, more actions are taken to limit Chinese expansion and dominance over the global market.
However, this worldwide rivalry has not stopped China from showing interest in purchasing oil and gas interests in Texas. According to an October 2015 report from Triple Pundit, Yantai Xingchao Industry Co., a Chinese investment holding company, has moved toward acquiring oil fields in the Permian Basin in Texas. As of now, Yantai Xingchao has only signed a letter of intent to buy in conjunction with Ningbo Dingliang Huitong Equity Investment Center, however that is the first step of the acquisition process. Due to stringent rules regarding foreign investment in United States operations, the transaction, if successful, would put possession of the oil fields in the hands of Moss Creek Resources, LLC, a subsidiary of Ningbo.
Why Is a Chinese Company Looking to Purchase U.S. Oil and Gas Interests?
Of course, this recent action by a Chinese investment holding company may have many wondering the same thing: why does this business wish to invest in oil and gas in the United States? Ultimately, Yantai Xingchao could be one of the first of many foreign investors looking for an investment bargain as a supply glut and lack of demand has caused prices to rise. Because China, for example, will likely depend on fossil fuels well into the future, those investors who purchase access to U.S. oil fields at a low price may, in fact, see a profit later on.