China's biggest offshore oil producer, China National Offshore
Oil Corp (CNOOC) Limited,
will pay US$2.3 billion for a stake in a Nigerian oil and
gasfield.
Hong Kong-listed CNOOC yesterday announced it had signed a
definitive agreement with South Atlantic Petroleum Ltd to acquire a
45 percent working interest in an offshore oil mining license, OML
130.
The purchase will be funded by internal resources of CNOOC, the
company said in a statement.
Earlier yesterday, CNOOC had requested its stock to be suspended
from trading on the Hong Kong stock exchange pending an
announcement of a "disclosable transaction." Trading ended at
HK$5.40 on Friday, having risen nearly five percent in the past
three months.
The deal is expected to be sealed in the first half of this
year, and still requires the approval of Nigerian National
Petroleum Corp (NNPC) and the Chinese government, CNOOC said.
The oil block, operated by global oil company Total, contains
the Akpo deepwater field, which is set to come on-stream in the
second half of 2008. CNOOC said it would contribute capital
expenditure of more than US$2 billion to develop the
field.?
The Akpo field, about 200 kilometers off the coast of Port
Harcourt, will have the capacity to pump 225,000 barrels of oil a
day after 2008, or nine percent of Nigeria's current production,
according to operator Total SA.?
When production peaks, estimated to be in 2009, CNOOC's light
oil entitlement from the block will be nearly 79,000 barrels a day,
Yang Hua, CNOOC's chief financial officer, said.
"The purchase of this interest in OML 130 helps CNOOC gain
access to an oil and gas field of huge interest and upside
potential, located in one of the world's largest oil and gas
basins," said Fu Chengyu, chairman and chief executive of the
Beijing-based offshore oil producer.
"The acquisition is in line with our goal of creating
shareholder value, and it will add to our production targets and is
within our pricing range," Yang told reporters. "Before the Akpo
field starts production in the first half of 2008 we'll have a very
small dilution in earnings per share. But after that, it will be
one of the factors boosting earnings," Yang said.
CNOOC said it is paying US$4.60 per barrel of oil equivalent
(BOE) for the main part of its Nigerian acquisition. "It is
obviously a very attractive price," Yang said.
CNOOC was a leading contender among several bidders for the
asset, sources said.
India's government blocked Oil and Natural Gas Corp's bid for a
reported 45 percent stake in the field last month because of
unspecified risks.
The Nigeria move marks another overseas thrust by CNOOC to
secure overseas reserves. CNOOC, which has made a string of
overseas acquisitions in countries including Indonesia and
Australia, lost out in a US$18.5 billion cash bid for Unocal last
summer to US giant Chevron.
Gordon Kwan, director of China Oil and Gas Research with Hong
Kong-based CLSA brokerage, said the rationale to acquire overseas
reserves is to diversify risk, for oil and gas, and seize
opportunities that could provide operational synergies with
existing projects, while minimizing independent exploration
risks.
"With potential gross recoverable reserves that could surpass
one billion barrels, the OML is one of the world's giant oil
discoveries. The deal will allow CNOOC to gain deepwater
expertise," Kwan said in an e-mail statement to
customers.?
South Atlantic's stake in the Akpo field was formally put up for
sale last September. The field needs billions of dollars of
investment.
Other partners in the field are NNPC and Petrobras.?
Nigeria is Africa's biggest oil producer and the world's
eighth-largest oil exporter, producing 2.4 million barrels per
day.?
(China Daily January 10, 2006)