CPC Corp, Taiwan (台灣中油) has handed over half of its oil exploration project in Chad to China CEFC Energy Co (中國華信能源) in a bid to reduce possible risks associated with the project and lower its financial burden.
According to the transfer agreement, the Chinese company paid US$114 million to take over 35 percent of the oil exploration rights to the Chad project.
CPC previously held 70 percent of the oil exploration rights.
CPC now owns 35 percent, China CEFC Energy has 35 percent and Chad’s government has the remaining 30 percent, CPC said.
Chad is one of the major oil-producing countries in Africa.
CPC began to seek oil exploration deals in Chad in 2003, and in 2004, Taiwan and Chad signed a preliminary agreement on cooperation in oil exploration.
CPC in 2006 signed formal oil fields and joint operations contracts with the Chadian government to secure rights to prospect for crude oil.
It said the Chad project is scheduled to start to produce oil next year.
CPC vice president Chang Ray-chung (張瑞宗) said the company decided to sell half of its oil exploration rights in Chad because it wants to reduce its overseas investment risks.
The Chad project faces economic risks at a time of weakness in the global oil market, while a growing number of riots triggered by militants has raised political risks in the African country, Chang said.
CPC had been looking to sell some of its exploration rights since 2007 and such transactions are not rare in the oil industry, he said.
Citing statistics compiled by Ernst & Young, CPC said that the number of similar exploration rights transfers on the world oil market topped 1,500 between 2010 and last year. Transactions exceeded US$140 billion during that period, CPC said.
Chang said that CPC had been in talks with China National Petroleum Corp (中國石油), China CEFC Energy, Canada’s Emperor, Fourwing and United Hydrocarbon International Corp, India’s Focus Energy, and Malaysia’s Petroliam Nasional Berhad or Petronas.
CPC decided to sign a deal with China CEFC Energy since that firm offered the best bid, he said, adding that the deal was completed after securing regulatory approval.
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