06/12 Upstream News Addax
Chinese circling for Addax swoop
Sinopec in talks to buy UK-listed player's African and Iraqi assets
XU YIHE and IAIN ESAU, Singapore and London
CHINA'S second-largest oil company Sinopec is in preliminary talks to acquire London-listed player Addax Petroleum, which has its key assets in West Africa and Kurdistan in Iraq.
A Sinopec source said the company is in talks with a number of foreign upstream companies including Addax.
The Geneva-headquartered company responded by saying: "Addax Petroleum acknowledges that it has held preliminary discussions with third parties expressing an interest in a potential transaction with the corporation," but did not name any suitors.
Addax said that there was no assurance the talks would succeed and it would not issue any further comments unless a deal is reached.
Chinese newspaper China Business News, citing unnamed Sinopec sources and Hong Kong's South China Morning Post citing other sources, said the takeover would be worth about $8 billion.
The Hong Kong daily also suggested that China National Petroleum Corporation, China National Offshore Oil Corporation and India's Oil&Natural Gas Corporation are eyeing up Addax.
The company's oil production averaged more than 136,000 barrels per day last year, while its resources at the end of 2008 stood at about 1.9 billion barrels of oil equivalent.
Addax's key Kurdish asset is its stake in the Taq Taq field, where it is partnered by Turkey's Genel Enerji, which has just been taken over by Heritage Oil. Addax's African assets lie in Nigeria, Gabon and Cameroon and it has exploration acreage in the Nigeria-Sao Tome Joint Development Zone (JDZ).
In Nigeria, its producing assets lie in OML 123 and OML 126 and also include its Okwok block. Plans are in hand to develop OMLs 124 and 137 while its Nigerian exploration acreage includes OPLs 227 and 291.
In Gabon, it is a partner in five producing assets - four of them onshore - and five exploration blocks, while in Cameroon it operates the offshore Ngosso permit.
It is also a partner in four blocks in the JDZ. Chinese companies hope to cash in on the relatively low crude price environment and the global economic downturn to buy foreign upstream assets.
So far, their major acquisition targets have been focused on Africa and the Middle East, where China has built close political ties.
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