Takeover bid values Addax at about $8bn
Sinopec and KNOC vying for Addax
NASSIR SHIRKHANI, Beirut
China's Sinopec and Korea National Oil Corporation (KNOC) are vying for Addax Petroleum in a heightened takeover battle valuing the Swiss-based company at more than $8 billion.
The winner would get access to attractive upstream assets in Nigeria, Gabon, Cameroon and northern Iraq.
Chasing Addax is part of a strategy by China and South Korea to secure long-term energy supplies for their economies.
KNOC, which is active in Iraqi Kurdistan, and Sinopec, which has interests in West Africa, are in talks with Addax, which has a market capitalisation of $6 billion.
“KNOC has put in a bid for Addax, for the whole company,”a source said.
Addax has emerged as an attractive target for state-owned companies in Asia after it began exporting oil from the high-profile Taq Taq oil field which lies in territory controlled by the Kurdistan Regional Government (KRG).
Exports from Taq Taq became possible after the KRG finally secured approval for oil sales from the central government following years of animosity.
Improving relations between the Iranian government and the KRG have led to renewed interest in the area, culminating in news last week of a proposed $6 billion merger between UK-based Heritage Oil and Turkey-based Genel Enerji, a partner in Taq Taq.
Credit Suisse is advising Sinopec and Bank of America-Merrill Lynch is advising KNOC, sources said.
However, a Seoul-based source said the Korean oil firm had doubts that its bid can compete with Sinopec's.
“KNOC said they don't have much chance with this one because the Chinese made a very attractive bid,”the source said.While Taq Taq is attractive - it aims to produce 180,000 barrels per day of oil 18 months - involvement in the field still carries political risk.
Addax and Genel Enerji signed a production sharing contract with the KRG in which they get a percentage of revenues from oil produced at the field, but Baghdad still views the PSC as illegal and in need of modification.
While oil exports began in early June, Addax has yet to receive any money and neither Baghdad nor the KRG has agreed to foot the bill.
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Thursday, 18 June, 2009, 23:01 GMT | last updated: Thursday, 18 June, 2009, 23:01 GMT
