ERHC Energy Inc (ERHE)

[RUBY1100]

above £6 or £7bn for Addax ...
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6506926.ece

Sinopec may not be the only Chinese bidder for Addax

Industry sources believe that if other companies enter the fray bidding rivalry could take the number above £6 or £7bn for AddaxLeo Lewis, Asia Business Correspondent
China’s hunger for energy and minerals is nothing new, and nor is wanting to lay its hands on the source.

Sinopec may at this stage be the most widely flagged potential Chinese bidder for Addax, the oil company active in West Africa and Kurdistan, but shares in its domestic rivals, China National Offshore Oil Corporation (CNOOC) and PetroChina, both slumped significantly.

Part of that may have been Monday’s slide in crude prices but traders said the selling was deal-related: the other two – either overtly or behind the scenes – could conceivably join the bidding for Addax. If they do, that virtually guarantees that whoever finally wins will overpay for the prized asset. Industry sources believe the £5 billion figure looks plump but can also imagine Chinese-on-Chinese bidding rivalry taking the number above £6 or £7 billion.

If the others enter the fray as expected, there will be plenty of novelty - not least the possibility that Beijing may soon abandon the practice of tidying up its lunges on foreign assets by limiting the number of bidders to one.

It has seen big deals for Unocal and Rio Tinto fail despite its backing for the single Chinese bidder and now, perhaps, is time for a change of strategy. Snubbing one Chinese buyer is easy; snubbing three competing ones, less so.

Competing Chinese bids would also allow the world a glimpse of what Chinese corporate ego looks like when it is not behaving itself for Beijing’s sake.

Look out for the personality of Su Shulin, the stellar young chairman of Sinopec but former director of PetroChina and one who has something to prove to the old shop. Look out too for the nervousness of CNOOC, worried that if it doesn’t secure a big deal like Addax it may be bought by Sinopec.

But perhaps the biggest feature of this deal, and the reason that Beijing may allow the trio to battle it out, is the nature of the prize. To China, Iraq is about much more than just a rich source of crude oil.

On one level it is about demonstrating that in a region ravaged by war and a world ravaged by financial crisis, it is China that has the cash and the vigour to make Iraq work. On another level, it is about parading a taste for the dangerous jobs where the brutal old rules of the energy business apply and China is prepared to play by them.

But, above all, this is about China’s growing confidence in its image as the neutral merchant of the world: an uncomplicated friend whose companies can operate stigma free and anywhere.