Chinese refiner Sinopec (中國石化) is in preliminary talks on acquiring Canadian oil and gas exploration company Addax Petroleum Corp, reports said yesterday.
The potential takeover bid is the latest effort by Chinese energy and resource companies to expand and diversify overseas assets as Beijing seeks to secure resources for the nation’s future growth.
Addax, whose shares are listed in Toronto and London, issued a statement noting speculation over a possible acquisition after its shares soared on Monday.
“Addax Petroleum acknowledges that it has held preliminary discussions with third parties expressing an interest in a potential transaction with the corporation,” it said without naming Sinopec or any other names.
It said there was no assurance the talks would succeed and that the company would not issue any further comments unless a deal is reached.
VALUE
The state-run Chinese newspaper China Business News, citing unnamed Sinopec sources, reported yesterday that the takeover would be worth about US$8 billion. However, reports of earlier acquisition overtures valued the company at about US$3 billion.
Beijing-based Sinopec, whose formal name is China Petroleum Chemical Corp, is the nation’s biggest refiner by capacity.
It urgently needs to expand its upstream international assets to help cushion against spikes in global crude oil prices that have caused it to post billions of dollars in losses in recent years owing to caps on domestic fuel prices.
Earlier this year, unconfirmed reports named Chinese offshore oil and gas company CNOOC (中國海洋石油), Japan’s Mitsubishi and India’s Oil & Natural Gas Corp as potential suitors for Addax.
BASE
Addax’s oil and gas exploration and production is based mainly in west Africa and the Middle East, including joint operation of the Taq Taq field in Iraq’s self-ruled Kurdish region with Turkey’s Genel Enerji.
The company reports it produced 134.7 million barrels a day of crude oil in the first quarter of this year.
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