Via Stratfor (subscription required), a report that China National Petroleum Corp. (CNPC) and other Chinese energy companies are actively hunting for new investments in foreign oil and natural gas projects.  As the article notes:

“…The combination of a global credit shortage and low oil prices has left many energy firms around the world in dire straits. The financial crisis has a silver lining, however, for countries such as China that have the cash to throw behind their state companies to buy up such energy assets when they are dirt cheap.

Beijing is encouraging Chinese banks to lend more money in hopes of driving up domestic consumption, thereby staving off a true economic and political crisis in the country. The Chinese government’s No. 1 economic priority is actually a social and political priority: keep the economy growing, without regard to profitability or efficiency, in order to avoid domestic unrest and political upheaval. Thus, while other international energy companies are facing a credit crisis, Chinese firms are able to turn to Chinese state-run banks, which are awash in liquidity.

The banks want to make sure that they put their resources into profitable ventures, however, and for Chinese energy companies, operating domestically is not nearly as profitable as pursuing opportunities abroad. Beijing’s focus on social stability requires it to regulate retail energy prices tightly so that rural peasants can afford to heat their homes and cook their food. But internationally, Chinese energy firms can sell and use resources in the global market with little to no interference from government price caps or other impediments.

The problem is that the government wants and needs to keep this cash at home — the whole point of easing credit restrictions is to spur reinvestment in the Chinese economy in order to promote social stability. By loosening the reins on lending, however, Beijing also loses some of its control over state-owned enterprises and their investments.

For example, when oil prices skyrocketed during the summer of 2008, price caps at the pump made selling refined products domestically a losing venture for Chinese refiners such as China Petroleum & Chemical Corp. (Sinopec), whereas they could sell their refined products internationally at a much greater profit. The only way Beijing was able to force Sinopec to adhere to requirements to keep up domestic production was through subsidy schemes — which also placed an undesirable drain on the government’s coffers. Stratfor sources have shared rumors that Beijing has even applied a “moratorium” on overseas investments, especially on companies like CNPC and Sinopec.

Despite Beijing’s desire to keep the cash at home, it has few options for controlling the international expansion of its state-owned energy companies or stemming the growing amounts of money flowing to them from state-owned banks. Chinese energy companies, like any business, are motivated by profit, but in rosy economic times they were able to bend to the government’s edicts without facing an existential threat. Amid the global downturn, they are being forced to choose between making a profit and pleasing Beijing — and profit appears to be winning.

Furthermore, the government knows that if it did clamp down on these powerful economic actors, a political battle between factions would ensue. China’s energy firms have powerful political patrons who, if pushed far enough, could launch a power struggle in Beijing. This might or might not result in the ousting of the current ruling elites, but at the very least it could paralyze government decision-making. This is something the stability-obsessed Politburo does not want to risk in a time of economic troubles.

As unemployment rises and exports drop, the government is facing new social pressures, and Beijing has been forced to concede some of its control over the economy. However, the more control the government gives up, the more opportunities are created for opposition groups — groups with powerful economic interests — to emerge and challenge the state. In the face of a global economic crisis, Beijing is facing an ever-shrinking list of options for maintaining control.”