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.
(China Daily December 13, 2003)