With India Out, China Moves In To Buy 45% of Akpo Field For $2.3 Billion

China's Chinese National Overseas Operating Corporation has jumped in where Indians feared to tread, buying a 45 percent stake in the rich Apko field from the former Nigerian minister of Defense for $2.3 billion, the company announced today.

Trading in CNOOC was supended on the Hong Kong exchange, where the stock has risen about 5 percent in recent months.

The stake was purchased after India's national petroleum company, ONGR, was rebuffed by its political bosses after it had tendered an offer to the ex-minister's South Atlantic Petroleum in the same range. The bosses said that they worried that "instability" would undo the value of the purchase.

It is not clear whether they meant the political instability the CIA and others has predicted will occur in Nigeria within the next 10 years, or the volatility of oil and gas prices that have shaken the global economy, or the possibility that the ex-defense minister will be prosecuted for corruption and void the deal.

Here is the latest from Reuters on the Apko purchase:

OT:CNOOC buying Nigerian oil field stake: source
Sun Jan 8, 2006 10:37 PM EST

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By Charlie Zhu and Wendy Lim

SINGAPORE/HONG KONG (Reuters) - Chinese offshore producer CNOOC Ltd. (0883.HK: Quote) is buying a stake in a major Nigerian deepwater oil and gas field operated by global major Total (TOTF.PA: Quote), a person familiar with the situation told Reuters on Monday.

The source declined to reveal more details of CNOOC's (CEO.N: Quote) purchase of the stake in the Akpo field from little-known Nigerian company South Atlantic Petroleum, which sources say are controlled by former Nigerian Defense Minister Theophilus Danjuma.

India's cabinet blocked Oil and Natural Gas Corp.'s (ONGC.BO: Quote) roughly $2 billion bid for a reported 45 percent stake in the field last month because of unspecified risks. CNOOC was a leading contender among several bidders for the asset, sources have told Reuters.

Trading in shares of CNOOC Ltd. was suspended on Monday pending an announcement about an acquisition, the Hong Kong exchange said, without giving further details. The shares finished at HK$5.40 on Friday, having risen nearly 5 percent in the past three months.

The Nigeria move marks another overseas push by the third-largest Chinese state-run oil company to secure overseas reserves.

CNOOC, which has made a string of overseas acquisitions in countries including Indonesia and Australia, lost out in its $18.5 billion cash bid for Unocal last summer to U.S. giant Chevron (CVX.N: Quote).

The South Atlantic stake in the yet-to-be-developed Akpo field was put up for sale last year. The field needs billions of dollars of investment.

Total said in May that Akpo would come onstream in late 2008 and was forecast to reach peak production of 225,000 barrels of oil equivalent per day.

The field was discovered in 2000, and is located 200 kilometers (120 miles) offshore in water depths ranging from 1,100 to 1,700 meters. Energy consultancy Wood Mackenzie estimates Akpo has condensate reserves of over 600 million barrels and commercial natural gas reserves of 2.5 trillion cubic feet.

Other partners in the field are Nigerian National Petroleum Corp. and Petrobras (PETR4.SA: Quote) (PBR.N: Quote).

Nigeria is Africa's biggest oil producer and the world's eighth-largest oil exporter, producing 2.4 million barrels per day.