In the article, a company spokesman says it has no designs on companies listed on non-Chinese bourses. That caveat would seem to exclude ERHC from consideration for a buy-in, takeover or other acquisition by Sinopec, as it is a U.S.-listed, publicly traded company.
It also stirred questions on the message boards, as the story seemed to contradict the words of Sinopec's vice-chairman to the Wall Street Journal just last month:
"Now, buying a company overseas might cause too much of a shock. That's why we prefer to buy a stake or join in cooperation -- it's more flexible," said Wang Jiming, vice chairman of the board for the listed arm of the state-owned company known as Sinopec."
But Sinopec is only the second largest of Chinese oil companies. Chinese Petroleum Corp. and CNOOC both have ample resources for such an acquisition, and other companies may as well.
The buyer mentioned by Doc in his post yesterday is said to be interested in ERHC's overall equity, not just its assets in Block 2, where it is partnered with Sinopec in the operatorship consortium.
Here is the Upstream article, one of the best ever regarding the company's immediate-future intentions:
Sinopec shuns risks
By Upstream staff
China's Sinopec, keen to keep financial risks to a minimum, has said it will not acquire upstream assets owned by publicly-listed foreign companies.
"It is not our intention or desire to buy into listed foreign companies," said Sinopec chairman Chen Tonghai.
When elaborating on the company's new overseas acquisition strategy in Beijing last week, Chen said his company will also aim to avoid risks caused by crude prices and the equity market in order to maximise returns for investors.
Instead, Sinopec's investment strategy is mainly focusing on exploration, although it is also eyeing oilfields in which it is interested in taking a stake or acquiring.
Chen said Sinopec's acquisition activities were not aimed at helping China meet its increasing demand for oil specifically, dismissing suggestions that the Chinese government is encouraging state-owned oil companies to secure supplies amid domestic shortfalls.
"Domestic demand cannot be met by Sinopec's equity oil," he said, adding that the company's overseas upstream acquisitions do not mean it will have to send its output back to China.
"We must separate investment in the foreign upstream sector from oil imports," he said.
Chen added that Sinopec will sell its equity oil in the international market and import crude elsewhere when the price is good.
"What we are concerned about is to maximise the return (for our investors)," he said.
"For example, the oil sands we produce in Canada could be sold in North America."
Sinopec is China's largest oil importer, accounting for 85% of China's total.
The company has made several acquisitions, with the latest deals including a million contract for a stake in Canada's Northern Lights oil sands project and a 50% stake in Angola's Block 18.
It is also working to conclude a deal with Iran to develop the Yadavaran oilfield, one of the largest undeveloped fields in the country.
Sinopec is also ready to bid for TNK-BP's $2 billion oil production unit Udmurtneft, which is producing 120,000 bpd and has reserves equivalent to about 1 billion barrels.
In March 2004, Sinopec made headway in Saudi Arabia by signing a natural gas exploration and development agreement with the Ministry of Petroleum and Saudi Aramco for section B in the Rub Al-Khali basin.
The deal involved forming a joint venture in which Sinopec holds an 80% stake and Saudi Aramco has 20%.
Under the agreement, Sinopec is to invest $300 million over the next five years.
Sinopec also holds exploration acreage in Algeria, Oman and Nigeria.
Looking forward, Sinopec aims to increase its overseas reserves by 65.2 million tonnes (489 million barrels). It also wants to raise overseas output sharply from last year's modest 200,000 tonnes (4000 bpd).
At present, the company is executing 10 production sharing contracts outside China, out of 25 so far signed.
China expects equity crude output by its companies from overseas oilfields to increase at an annual rate of 8% to reach 70 million tonnes per year (1.4 million bpd) by 2020, more than four times the current volume.
The country's booming economy has led to a surge in demand for oil, with imports hitting a record high last year after jumnping 35% in 2004.