A Study Of Factors Affecting Chinese Oil Companies Overseas Investment And Its Implications For Energy Security In China

China is the world’s second largest oil consumer behind the United States, according to the International Energy Agency (IEA). It was a net oil exporter until the early 1990s whereas became the world’s second largest net importer of oil in 2009.To solve oil supply disruption, Chinese government has adopted its policy direction to supply-side relying on expansion of NOCs overseas investment and operation. The three major Chinese NOCs-China National Petroleum Corporation(CNPC), China Petroleum & Chemical Corporation(Sinopec) and China National Offshore Oil Corporation(CNOOC)-have been learning a great deal about doing business abroad, and have emerged as significant players in global mergers and acquisitions in upstream oil and natural gas as benefits of policy rewards.Diverse and complex factors are founded from this research influencing 3 NOCs overseas investment behavior and the factors are changed as the mechanism of factors is rearranged according to business surrounding evolved.Initially, the main factors of NOCs overseas investment was government policies and recent investment behaviors are significantly influenced by market oriented factors such as profit-pursuit.Regarding Energy security agenda, the reliance on aggressive acquisitions of overseas oil fields and equity oil production could not effectively improve enlargement of domestic oil supply because the NOCs produced oil from overseas are rather sold at the market than supplied to China for transaction cost reduction.Given that the NOCs’ profit oriented abroad operation behavior, the energy security for China should be implemented that the integration of energy policy with macroeconomic policy-such as fiscal and monetary policies and foreign policy and needs to set-up strong government agency to implement NOCs operation effectively.In addition, China should have to focus its energy security policy on Strategic Petroleum Reserves (SPR) enlargement to reduce the economic impacts of crude oil supply disruptions or to deter purposeful reductions in crude oil supply for political ends as most oil-imports countries adopted.