The Chinese oil group Sinopec is to gain access to reserves in Iraq after agreeing to acquire the UK-listed company Addax.
The Ј4.4bn deal is the latest in China's efforts to secure overseas resources to reduce its reliance on domestic production and comes just weeks after mining group Chinalco's attempt to raise its stake in Rio Tinto collapsed.
Buying Addax – based in Switzerland and listed in the UK and Canada – will help state-owned Sinopec insulate itself against the volatility of the oil price and also boost its presence in Africa.
Addax has operations in Gabon, where Sinopec has been involved in oil exploration, as well as in Nigeria and Cameroon.
Sinopec is paying C$8.27bn (Ј4.37bn), a 47% premium to the Addax share price before the company said it was in takeover talks this month. «We are pleased that Sinopec has recognised the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum," said Addax's president and chief executive, Jean Claude Gandur.“The efforts and accomplishments that Addax Petroleum has achieved thus far will be built on through increased investment in the business and acceleration of development and exploration plans.»
Addax's oil and gas exploration and production activities are focused on west Africa and the Middle East. In Iraq, it operates in two fields in the semi-autonomous region of Kurdistan including the Taq Taq field, where it is sitting on 42.5 million barrels of proven and probable reserves. It also has an interest in the Sangaw North field along with the Korean group KNOC.
Oil companies eager to exploit Kurdistan's oil reserves were given a boost this month when the Baghdad government allowed oil to be exported from Kurdistan for the first time, resolving a dispute between the national and regional authorities.
Soon afterwards, UK-listed Heritage Oil and Turkey's Genel Enerji – Addax's partners in the Taq Taq field – announced a merger to create the combined group HeritaGE. HeritaGE and the Norwegian group DNO are interested in another Kurdistan field at Tawke.