Chinese Oil Companies Overseas Investment Risk Analysis

Oil has been known as "the blood of modern industry", which not only has a wide range of economic use, but also is an important strategic resource, plays an important role in the world economy and social life. With the continuous improvement of people’s living standards and rapid economic development, Chinese demand for oil resources is rising. As early as1993, Chinese domestic oil supply was unable to meet the needs of the domestic economic development and social life, China need to import large quantities of oil, and heavily depend on imported oil supply. At present, China is the third largest oil importer and the second largest oil consuming country of the world, Chinese dependence on foreign oil all the way up from6%in1993to54.3%in2011, the national oil security is facing a huge risk. In this context, it becomes an inevitable choice for Chinese oil companies to go out and increase overseas investment. Up to now, Chinese oil companies have invested in over40countries, with more than100overseas investment projects, brought back thousands of tons of share oil each year, have made an outstanding contribution to China’s economic construction. At the same time, Chinese oil enterprises meet a series of complex risks on foreign political, economic, technical and legal policy. Therefore, how to prevent and respond to foreign investment risk has become a priority.In this paper, the combination of theory and practice, case studies, empirical analysis and other methods have been used. In view of the related theories, I made a comprehensive and in-depth discussion and analysis on the risk of overseas investment of Chinese oil companies. Chapter One systematically describes the overview of the development of foreign investment of Chinese oil companies, detailing the brilliant achievements of overseas investment of Chinese oil enterprises, listing the history of foreign investment of three major Chinese oil companies through the table; summarizing the principal investors, investment regions and investment characteristics of the Chinese oil companies, listing the various problems with overseas investment of the Chinese oil enterprises. Chapter two describes the foreign investment risks of Chinese oil companies, mainly stating the basic concepts and theories of foreign investment, risk and foreign investment risk, describing the detailed risks of the political, economic, technical and legal policy of foreign investment of Chinese oil companies. Chapter three focuses on the reason of foreign investment risk of Chinese oil companies, analysing the risk reason of political risk, economic risk, technology risk and legal policy risk causes. The causes of the political risk are mainly from the political unrest in the host country and a third country intervention, the causes of the economic risk are mainly from the price, foreign exchange and financing. Chapter four focuses on foreign investment risk assessment of external investment environment for Chinese oil companies, stating in details of gray relational risk evaluation method and fuzzy comprehensive evaluation method. Finally I use fuzzy comprehensive evaluation method, actual data and case of the overseas investment of Chinese oil companies to make the empirical analysis, judging the investment risk level of a country in the Middle East. Chapter five raises methods to risk management of overseas investment for Chinese oil companies, introducing the political risk management, economic risk management, technical risk management and legal, policy risk management, providing a reference for overseas investment of Chinese oil companies to reduce risk and improve income.