Chinese investment in the UK energy sector could exceed £43 billion in the next 10 years, according to a new report published by law firm Pinsent Masons and the Centre of Economic and Business Research.
The biggest target for Chinese capital, the report claims, will be investment in projects including nuclear energy, wind power generation and photovoltaic power generation.
In July 2012 China made its entry in to the UK North Sea when state-controlled Chinese National Oil Corporation (CNOOC) paid £9.7 billion to acquire Canadian explorer Nexen which at the time was the UKCS’s second biggest oil producer.
In a separate deal, China’s Sinopec acquired a 49% stake in Talisman Energy’s UK operations with a $1.5 billion investment, and Scotland’s only oil refinery – at Grangemouth – is also run as a joint venture between Ineos and China’s largest oil and gas producer, PetroChina.
UK and Chinese business leaders consulted for the report are already seeing a clear rise in the number of joint-ventures between UK and Chinese firms and the number of UK-China partnerships need to grow over the next decade to sustain the expected investment.
Business leaders also believe that the energy sector is expected to see a continued increase in Chinese investment in projects including offshore wind farm development and other key renewable power networks, however, the report finds that this will pick up significant pace in the latter half of the forecast period.
Richard Laudy, head of infrastructure at Pinsent Masons, said: “Our report finds that this level of investment is going to be a game-changer for the UK infrastructure.
“Over recent years we have seen China’s role as an investor evolve from making indirect investments through sovereign wealth funds to Chinese businesses now becoming co-funders, co-developers and co-contractors in major UK infrastructure projects.
“Although, the flow of investment from China has already started – we expect this to be the beginning of a major trend as a trickle of major Chinese investment turns into a wave over the coming decade.”