The unprecedented nosedive in international oil prices triggered by the global credit crisis offers a golden opportunity for China to acquire overseas oil assets at minimal cost, said analysts.

China's oil companies are trying to fill up reserves by targeting foreign crude oil and oilfields, taking advantage of international prices that have plummeted to around $40 a barrel, significantly lower than the expected $50 a barrel.

Many international oil corporations need large amounts of cash from potential investors and Chinese oil companies supported by government funds are flush with it, said Lu Ya, an energy analyst with Deloitte.

"Now is the best time for China to solve its energy supply problem. China is becoming a big oil importer and that will not change in the foreseeable future," said Lu.

Oil and gas investments in the Middle East are still the most favorable assets but Chinese oil producers and refiners are seeking opportunities in other major overseas oil reserves.

China Development Bank in February signed a $25 billion deal with Russia's state oil producer Rosneft and pipeline monopoly Transneft in exchange for oil from the huge new East Siberian fields for the next two decades.

The oil will go to China National Petroleum Corporation (CNPC) and to China Petroleum and Chemical Corp, also known as Sinopec, the country's top two oil producers.

Brazil also agreed to supply China with 100,000 to 160,000 barrels of oil a day at market prices in exchange for up to $10 billion of Chinese investment in its huge oil reserves.

China wants to stockpile 44.6 million cu m of crude by 2011, according to CNPC, the country's biggest oil producer.

CNPC recently showed interest in a joint acquisition with European companies of Australia's third-largest oil and gas company Santos. It acquired Petroleum Kazakhstan (PK) for $4.18 billion in October 2005, by far the largest overseas acquisition by a Chinese oil company.

China is also planning to build more strategic domestic oil stockpiles. Four oil stockpiles were completed recently and the country will start constructing oil reserves at eight more locations this year.

The Chinese government is considering using its vast foreign exchange reserves to set up a fund supporting oil firms' pursuit of foreign mergers and acquisitions, the industry journal China Petroleum Daily reported last month.

China is the world's second-largest energy consumer and experts say the country imports over 50 percent of its oil. Total oil consumption will likely reach 600 million tons and natural gas consumption 3000 billion cu m by 2020.

ref.: chinadaily.com

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Big oil companies might be forced to move faster on acquisition if they want a take full advantage of the present situation, this may be good for canadian companies, maybe even in depressed oil sands.