Sinopec, CNOOC Agree on $1.8B for Angola Asset
LONDON (Dow Jones Newswires), October 1, 2008
China Petrochemical Corp., or Sinopec Group, and Cnooc Ltd. are close to buying a stake held by Marathon Oil Co. in an Angolan oil block after agreeing a price of around $1.8 billion, two people familiar with the matter said Wednesday.
Marathon has chosen Sinopec and Cnooc's joint offer over separate bids from ONGC Videsh Ltd., the overseas investment arm of India's state-run explorer Oil & Natural Gas Corp., and Brazil's Petroleo Brasileiro, known as Petrobras, the people said.
Sinopec and Cnooc are still to negotiate other terms of a sale-and-purchase agreement with Marathon for 20% of deepwater Block 32, and will seek approval from the Chinese and Angolan governments before a deal is completed and announced, the people added.
It could take another two weeks to finalize the deal, one person said.
Marathon intends to retain a 10% interest in Block 32, where 11 successful exploration wells have been drilled.
Lee Warren, manager of Marathon's external communications, and Cnooc's Head of Investor Relations Xiao Zongwei separately declined to comment. Sinopec's media relations team couldn't immediately be reached for comment.
Sinopec and Cnooc are China's second- and third-largest oil producers by capacity. Sinopec is the parent company of China Petroleum & Chemical Corp.
China's state oil giants are stepping up their pursuit of overseas assets as domestic oil output stagnates, and supply of natural gas fails to keep pace with the growth in demand.
Last week, Sinopec won the bidding for Canada's Tanganyika Oil Ltd., which has producing oil fields in Syria. Sinopec also bid recently for London-listed Imperial Energy Corp., whose assets are in Russia, but lost out to ONGC.
A person familiar with the matter said Cnooc has bid between US $300 million and US $700 million for oil and natural gas assets in Trinidad and Tobago put up for sale by Canada's Talisman Energy Inc.
Interest in Block 32 was kickstarted by Marathon's decision early this year to review all assets in its global portfolio, including refineries and oil projects nearing development or already producing crude.
Late Tuesday, Marathon announced the disposal of its 50% stake in a joint venture selling transport fuels in the U.S. in a deal worth $700 million.
Marathon expects total pre-tax proceeds from all asset sales in the $2 billion to $4 billion range.
Block 32 is operated by Total SA of France, which owns a 30% stake, while U.S. oil major ExxonMobil Corp. has an interest of 15%. Angola's state oil company Sonangol and the Petrogal unit of Portuguese oil and gas firm Galp Energia own 20% and 5%, respectively.
It's unclear whether any of these parties will exercise their preemption rights.
Angola is a cornerstone supplier of crude oil to China and has been a major recipient of loans and investment in recent years as the world's fastest-growing major economy seeks to leverage political ties to secure greater access to its natural resources.
In 2006, Sinopec agreed to pay $692.2 million for stakes in three deepwater oil blocks in Angola through its Sonangol Sinopec International joint venture with Angola's state oil company.
The joint venture took a 40% stake in Block 18, which has a tertiary reserve estimated at 1.5 billion barrels, comprising mostly light crude.
It also took a 27.5% stake in Block 17 and a 20% stake in Block 15.
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