CNOOC to buy $2.3 bln Nigeria oilfield stake

I think not
By Charlie Zhu and Wendy Lim

SINGAPORE/HONG KONG (Reuters) - CNOOC Ltd. is to pay $2.3 billion for a stake in a Nigerian oil and gas field, marking the latest overseas acquisition by a state-run Chinese major oil company keen to meet surging domestic demand.

CNOOC, China's dominant offshore oil and gas producer, said on Monday it will pay cash from internal resources to buy a 45 percent working interest in Nigerian Oil Mining License (OML) 130 from South Atlantic Petroleum in its largest overseas purchase.

The block, operated by global oil company Total, contains the Akpo deepwater field, which is set to come onstream in the second half of 2008. CNOOC said it will contribute capital expenditure of $2.25 billion to develop the field.

"It's quite a good deal. We expect there will be upside on share performance. Also, CNOOC is likely to catch up with other oil stocks, which gained on the strong international oil price today," DBS analyst Gideon Lo said.

CNOOC said it is paying $4.60 per barrel of oil equivalent (BOE) for the main part of its Nigeria acquisition. By comparison, CNOOC rival China National Petroleum Corp. (CNPC paid about $7.30/BOE last year for PetroKazakhstan, CNOOC said.

Trading in CNOOC shares was suspended on Monday pending an announcement about an acquisition. The stock finished at HK$5.40 on Friday, having risen nearly 5 percent in the past three months.

The announcement followed Reuters reports on Monday that the deal was imminent.

CNOOC did not say who owns South Atlantic Petroleum, but sources have said is controlled by former Nigerian Defense Minister Theophilus Danjuma.

The field and other assets nearby are estimated by some industry sources to have total recoverable reserves of up to 2 billion barrels in oil and gas.


The reported acquisition should brighten the outlook for CNOOC's production growth, Lawrence Lau, a Hong Kong-based analyst with brokerage BOCI, said on Monday before the deal was announced.

"Our initial impression is the yet-to-be-developed Akpo field means there will be production upside in future," Lau said. "If Total remains the operator it will help CNOOC lower the risks to operate in a new country and in deep water."

CNOOC was a leading contender among several bidders for the asset, sources have told Reuters.

India's cabinet 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 push by CNOOC to secure overseas reserves to help meet China's voracious demand for energy. CNOOC, which has made a string of overseas acquisitions in countries including Indonesia and Australia, lost out in an $18.5 billion cash bid for Unocal last summer to U.S. giant Chevron.

South Atlantic's stake in the Akpo field was formally put up for sale last September. The field needs billions of dollars of investment.

Total said in May that Akpo would come onstream in late 2008 and was forecast to reach peak production of 225,000 barrels of oil equivalent per day.

The field was discovered in 2000, and is 200 kilometers (120 miles) offshore in water depths ranging from 1,100 to 1,700 meters.

Other partners in the field are Nigerian National Petroleum Corp. and Petrobras.

Nigeria is Africa's biggest oil producer and the world's eighth-largest oil exporter, producing 2.4 million barrels per day.
I think not
So here's a question, is a corporation still "evil" when it's state owned?

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