<!--:es-->Sinopec buys Addax for 7.2 billion US dollars<!--:-->

Sinopec buys Addax for 7.2 billion US dollars

OTTAWA – China’s Sinopec has agreed to purchase oil exploration firm Addax Petroleum for 7.2 billion dollars in the largest ever Chinese offshore acquisition, the companies announced yesterday.

Sinopec is a subsidiary of China Petrochemical Corporation, the largest oil refiner in Asia and China’s second-largest oil company after China National Petroleum Corp.

Addax is based in Geneva, Switzerland, and listed in London and Toronto. It is one of the largest independent oil producers in West Africa and the Middle East, with oil fields in Nigeria and the autonomous Kurdish region of northern Iraq.

The company said it produced an average of 134,700 barrels of crude oil a day in the first quarter of 2009.

According to terms of their agreement, Sinopec will pay 52.80 dollars per Addax share.

The offer represents a 47 percent premium over the closing market price for Addax shares on June 5, just prior to the announcement of takeover talks, the companies said.

As well, it is 137 percent more than its average trading price one year ago.

It is a “very impressive price,” analyst Martin Molyneaux, of First Energy Capital, told AFP.

In a statement, Sinopec said “the acquisition of Addax Petroleum is a transformational transaction.”

It also marks a new direction for China into Africa and the Middle East, after previously focusing on Central Asia and South America, as well as a first glimmer of investment hope after several failed bids by state-owned siblings.

Last month, China’s Aluminum Corp.’s 19.5 billion dollar offer for a part of Anglo-Australian mining giant Rio Tinto PLC was rejected.

China’s Cnooc Ltd.’s 18.5 billion dollar bid for California energy company Unocal Corp. also collapsed in 2005, under US political pressure.

But, this deal may create troubles for China in Iraq, cautioned analysts.

The deal forges a defacto alliance in Iraq between Sinopec and Heritage Oil, which on June 9 agreed to buy Addax’s partner Genel Energy, in an oil field in the Kurdish region of Iraq.

“You’ve got two new bedfellows in the Taq Taq project” in northern Iraq, Molyneaux said. “I’m anxious to see the response (to the deal) in Iraq, as well as from the Nigerians and Gabons,” he said.

Companies doing business in the north of Iraq, some analysts warned, risk being blacklisted from participation in Iraq’s southern oil fields.

“The key will be how investment dollars are redeployed,” Molyneaux commented.

Addax president Jean Claude Gandur said in a statement: “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.”

“While Addax Petroleum will cease to be a publicly traded company, we look forward to continuing our business in the countries in which we operate for the benefit of all stakeholders,” he said.

The deal was “unanimously” approved by Addax’s board of directors, who described it in a statement as “fair” and “in the best interests” of the company.

Formal documentation for the takeover is to be presented by month-end, said a statement. The purchase is to be finalized by August 24.