Wednesday, June 24, 2009
China buys Addax for £4.4bn to tap Iraqi oil
China has made its first big foray into Iraq in a C$8bn (£4.4bn) deal to buy London-listed oil explorer Addax Petroleum. By Rowena Mason Published: 12:39PM BST 24 Jun 2009 Previous1 of 4 ImagesNext A platform at an oil well in the Northern Iraq region of Kurdistan An Iraqi worker opens an oil pipeline at al-Shouayba refinery station in Basrah Iraqi workers inspect equipment in the control room of the Basra oil refinery An Iraqi oil refinery engineer walks along the Iraqi- Turkish pipeline in Kirkuk The board of Addax, which is also listed in Toronto and based in Switzerland, has recommended a C$52.80 per share offer from Sinopec, the Chinese state oil and gas company. Addax has oil assets in West Africa and the Middle East, particularly the Kurdistan region of northern Iraq. The company has increased its crude oil production from 8.8m barrels per day ten to 134.7m barrels per day over the last ten years. Related Articles China rebuffs US and EU over trade attack China on the rise once more across the East Heritage Oil eyes FTSE 100 after takeover deal Heritage makes large Iraqi oil find Shell in talks with Chinese oil companies over Iraqi sites Questor: Good news could well flow from Dana's explorationThere has been a scramble for oil assets in Iraq's Kurdish region, which is more open to foreign investment than Baghdad. Heritage Oil, also a London listed explorer, agreed to buy Addax's partner in Kurdistan, Turkey's Genel Energy, for £1.5bn earlier this month. Addax and Genel both produce oil at Taq Taq, with the intention of increasing its production from 40,000 barrels a day to a peak production of 180,000 barrels a day. Sinopec's offer represents a 47pc premium to the closing price on June 5, the day before Addax announced it was in preliminary discussions with Sinopec and others about a potential deal. Its shares rose 282, or 12pc, to £26.50 in London The offer from the cash-rich Sinopec, an abbreviation of the China Petrochemical Corporation, does not rely on outside financing. It will have to pay a termination fee of C$300m if it withdraws from the acquisition, which needs the approval of the Chinese government by the end of August. Jean Claude Gandur, chief executive of Addax, said he hoped Sinopec would increase investment in the business and accelerate exploration plans. "We are pleased that Sinopec has recognised the highly attractive asset portfolio and exceptional team that we have assembled at Addax Petroleum," he said. The transaction is the second this month involving assets in Iraq's Kurdish territory after the region started exports at the beginning of June.