China Petroleum & Chemical Corporation (Sinopec Group) announced Wednesday it had reached an agreement with Taiwan's China Petroleum Corp (CPC) to conduct joint energy exploration in an offshore block near northern Australia.

Sinopec roup's wholly-owned subsidiary Sinopec International Petroleum Exploration and Production Corporation (SIPC) sold 40 percent of its stake in exploration block NT/P76, which was won by Sinopec Group in 2008.

On the same day, Sinopec Group also announced that its takeover of Geneva-based oil and gas producer Addax Petroleum Corp. has won the approval of the Chinese government. It offered to pay CAD$52.8 (US$45) per share for Addax in June. By the end of 2008, Addax had 536 million barrels of proven and probable oil reserves, as well as an average production of about 140,000 barrels of crude oil per day (equivalent to 7 million tons per year). The acquisition, which was referred to as a "transformational transaction" in Sinopec's statement, will undoubtedly provide the group with more reliable sources of crude oil.

If the Addax deal goes through, it will be the biggest overseas takeover so far by domestic oil companies, analysts said.

In the meantime, other major oil producers are also busy finding possibilities of overseas investment. Recent media reports said that China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation (CNOOC) had agreed on a joint-purchase of 75 percent of the stake that Repsol YPF has in its Argentine unit YPF. The two Chinese oil makers reportedly plan to pay US$13.2-14.5 billion for this deal.

According to a recent McKinsey report, Chinese enterprises' outbound M&A volume in the first half of 2009 rose by 40 percent compared to the same period last year, while global cross-boarder M&A volume dropped by as much as 35 percent year-on-year. Many of these Chinese companies are national oil makers.

"Such frequent M&A activities are not just a pursuit of high profitability, it's also out of the concern of national energy security," said Dong Xiucheng, vice dean of the School of Business Management at China University of Petroleum. Dong said that by controlling more resources in the upstream industry, China will be more capable of protecting itself from international market price fluctuations and stabilizing domestic energy prices.