Sinochem Corp, one of the largest domestic oil trading companies, confirmed
that it has paid US$100 million to buy a stake in an Ecuadorian oilfield,
marking its second acquisition of overseas oil and gas reserves.
The company bought a 14 per cent stake in US oil major ConocoPhillips in
their Block 16 oilfield, which now has a daily output of more than 57,000
barrels, according to a statement Sinochem sent to China Daily.
Sinochem enjoys the rights to obtain 8,000 barrels a day from the production.
The company can either transport the oil back home or sell it on the
international market, the statement said.
Taiwan Province-based Chinese Petroleum Corp (CPC) holds a 31 per cent stake
while the Spanish operator Repsol YPF takes a controlling 55 per cent.
Since starting production in 1994, the oilfield has produced an estimated
recoverable oil reserve of 325 million barrels, according to the CPC's website.
"The acquisition seems quite attractive, given the low prices it paid and the
current price hikes on the international oil market,'' said an analyst with
Hongkong & Shanghai Banking Corp.
A Sinochem manager said the risk is low as the field is already in
production.
The deal marks another step for Sinochem, which used to be a pure oil and
chemical trading firm, to expand its upstream oil and gas reserves as a way to
catch up with domestic oil giants like PetroChina and Sinopec.
Earlier this year, Sinochem made its first overseas acquisition by taking
over Atlantis, a unit of Norwegian oilfield service group Petroleum
Geo-Services, for nearly US$105 million. The Norwegian company has gas assets in
the United Arab Emirates and oil production in Tunisia.
"The deals help us grow the upstream business,'' said the Sinochem manager.
"We are also looking into opportunities for further expansion overseas.''
Chinese oil companies have paid billions of US dollars to acquire overseas
oil and gas reserves in the past two years to feed the booming Chinese economy.
The country is leading global oil demand growth and has overtaken Japan as
the world's second-largest oil consumer, just behind the United
States.
