CNOOC Ltd, china's top offshore oil producer, announced recently that it has won a bid with Sinopec, China's largest refiner, to buy a 20% stake in an Angola oil block.

The two Chinese oil companies will buy a 20% stake in Angola's offshore deepwater Block 32 for US$1.3 billion in cash from US Marathon Oil Corp. The deal, pending government and regulatory approvals, is expected to close by year-end.

Block 32 spans an area of 5,090 square kilometers and is the site of 12 announced petroleum discoveries.

To complete the deal, CNOOC formed a 50-50 joint venture with Sinopec International Petroleum Exploration and Production Corporation (SIPC), a wholly-owned subsidiary of Sinopec Group, in Angola.

Yang Hua, President of CNOOC, deemed the deal a rare opportunity to buy overseas assets. "Since its public listing, CNOOC has adhered to a strategy of value-based mergers and acquisitions. The Angola deal is a good demo of our strategy," said Yang.

According to CNOOC, apart from government and regulatory approvals, the deal is also subject to the pre-emption rights of other parties to the Production Sharing Contract and Joint Operating Agreement.

Block 32 is jointly owned by multiple oil companies. Marathon will retain a 10% interests in the block after the sale. Total SA of France has a 30% stake and acts as the operator. Sonangol, Angola's state-owned oil company, owns 20%, while Exxon Mobil Corp. holds 15% and Galp 5%.

For more details, please read the complete Chinese story here: http://www.china-cbn.com/s/n/000004/20090720/000000121074.shtml

(China.org.cn by Wu Nanlan July 20, 2009)