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Chinese Oil Company Pays $2.3 Billion in Nigeria Deal

Posted on: Wednesday, 11 January 2006, 03:03 CST

BEIJING - Chinese state-controlled oil company CNOOC Ltd. said Monday it is paying $2.3 billion for a 45 percent stake in a Nigerian oil field in its first major investment since its failed bid to take over Unocal Corp. last year.

The deal adds to a multibillion-dollar string of foreign acquisitions by Chinese oil companies, which are aggressively pursuing energy supplies to fuel China's booming economy.

The agreement, which requires approval from the Nigerian and Chinese governments, covers a deep-water area of the oil-rich Niger Delta region, CNOOC said.

It said the area includes the Akpo oil field discovered in 2000 and three other "significant discoveries."

Another contender for the Nigerian field was India's biggest oil company, state-owned Oil & Natural Gas Corp., which submitted a winning $2 billion bid last month. However, the Indian cabinet blocked that deal, contending it wasn't commercially viable.

The deal serves CNOOC's desire to grow "through the exploration and development of offshore fields and achieving geographic diversification of the company's portfolio," the company's chairman, Fu Chengyu, said in a written statement.

Hong Kong-based CNOOC said it would pay for the deal out of its own cash reserves. The Chinese government's China National Offshore Oil Corp. owns 70 percent of CNOOC's shares.

CNOOC offered $18.5 billion last year for Los Angeles-based Unocal but withdrew its bid in August after opposition from U.S. politicians.

The company didn't say whether the oil produced by the Nigerian field would be exported to China or sold in another market.

The Scottish consulting firm Wood Mackenzie has estimated Akpo's recoverable oil reserves at 620 million barrels and natural gas at 2.5 trillion cubic feet, according to The Asian Wall Street Journal.

China imports more than 40 percent of its estimated daily consumption of 6 million barrels of oil, and that proportion is expected to grow amid surging economic growth, according to foreign analysts.

China became a net oil importer for the first time in the 1990s after meeting its needs for decades from domestic supplies. It is now one of the world's top consumers of foreign oil.

Despite its government ties, Mr. Fu has insisted in the past that CNOOC's decisions are motivated solely by commercial considerations, not official policy.

Last year, in China's biggest foreign deal to date, its leading state-owned oil company, China National Petroleum Corp., agreed to pay $4.2 billion for a producer in neighboring Kazakhstan. Chinese oil companies also have signed oil exploration or production deals in Sudan and Venezuela.

Source: Augusta Chronicle, The

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