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Cnooc Buys Oil Interest In Nigeria
A workman walks through steel construction at Cnooc Ltd.'s marine engineering facility. The Chinese state oil firm agreed to buy a 45 percent interest in a Nigerian oil field in its first overseas deal since its unsuccessful Unocal bid.
(By Paul Hilton -- Bloomberg News)
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The Chinese firm's case was not helped by the insistence of its executives that the bid for Unocal was nothing more than a commercial transaction, even as it acknowledged that much of the financing for it was to come at low interest from state-controlled lenders.
At the end of 2004, Unocal recorded proven oil reserves of 659 million barrels and natural gas reserves of 6.57 trillion cubic feet. By contrast, the Nigerian oil field has estimated proven reserves of more than 620 million barrels of oil and about 3.75 trillion cubic feet of natural gas, according to Saad Rahim, an analyst at PFC Energy, a District-based consulting firm. Analysts said it appeared Cnooc would be able to record at least 45 percent of those reserves as its own -- though they said the percentage could be higher.
As Chinese companies have gone global in search of energy, some have been criticized for planting the flag at any cost, paying exorbitant prices for dubious stakes. But analysts said the price for this deal is in line with what state-controlled oil companies in China and India have paid to secure oil reserves around the world.
"If you're talking to one of the international oil companies, they view that as an overpayment," said Rahim. "But for the Chinese companies, because they've been tasked by the government to go out and get as much oil as they can, then the $2 billion isn't an overpayment in their eyes."
Xiao, the Cnooc spokesman, affirms the company did not overpay.
"It's a good deal," Xiao said. "It adds to our reserves, and we paid an attractive price."
Staff writer Justin Blum contributed to this report.
