China’s CNOOC seeks "value" in Africa projects
China’s top offshore oil and gas producer CNOOC Ltd (0883.HK: Quote, Profile , Research) has defended its search for new acreage in Africa against critics who say China is desperate to secure oil reserves at any price to fuel its roaring economy.
“Concerning our investment in Africa, there were a lot of comments in the international media saying Chinese companies pay more money and take higher risks than other international companies investing in African countries. I think that’s most wrong,” CNOOC President Fu Chengyu said late on Wednesday.
“In terms of political risks I think we share no more political risks than international oil companies. Secondly, all the investments we make in any African country are based on economic returns.”
Chief Financial Officer Yang Hua told Reuters that there was one criterion for investments: “Value. If there’s no value, no deal,” he said.
CNOOC is already in Nigeria, Kenya and Equitorial Guinea.
The Nigerian presence includes a 45 percent interest in the OML 130 block operated by Total (TOTF.PA: Quote, Profile , Research), which Yang said had been appraised at 1.2 billion barrels of proved and probable reserves by energy consulting firm Wood Mackenzie.
“A recent appraisal well has been further proof of that number and we are very excited about that,” he said.
Total plans to start producing 225,000 barrels per day from a first field towards the end of 2008, with a second field developed separately.
Analysts at Taifook Research said that assuming a 50 percent proved ratio, it would add 10 percent to CNOOC’s proven reserves.
Another Nigerian block, OPL 229, is still in the exploration stage. Yang said a first well proved to be dry and preparations for a second were underway.
CNOOC (CEO.N: Quote, Profile , Research), which ran into political obstacles when it bid $18.5 billion for U.S. firm Unocal in 2005, has made acquisitions from Australia and Indonesia and is scouring the globe for more. China, the world’s fastest-growing major economy, is already the top oil consumer after the United States.
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