At Last, China Makes Dramatic Entry Into Nigerian Oil Sector

Last week's decision of China's largest petroleum refiner, Sinopec International Petroleum Corporation to acquire Addax Petroleum Corporation has been described as a victory of sort for the Asian country after years of unsuccessful bidding for a piece of action in the Nigerian oil industry.

Sinopec, an acronym for China National Petroleum Corporation is said to have paid $7.24 billion (N1.06 trillion) for Addax Petroleum after the Canadian-based outfit gave the nod to the Chinese giant's $46 a share takeover offer.

In 2006, CNOOC, one of China's largest state-run oil and gas producers, had agreed to buy a stake in a Nigerian offshore oil and gas field for $2.3bn (£1.3bn).

It also secured four oil drilling licences from the country.

But under the latest deal, Sinopec, a refiner formally known as China Petroleum & Chemical, would gain access to substantial reserves in Nigeria, some other parts of West Africa and the Middle East if the takeover of Addax is approved.

Analysts are, however, divided over the implications of the acquisition, which industry sources said is raising the fear of a possible staff rationalisation in the petroleum company.

Already, there were talks of a possible job loss among the Nigerian members of staff of Addax, but none of them was ready to be quoted yesterday.

A senior official of a multinational oil firm argued that through the acquisition, Sinopec was merely taking advantage of low crude prices and shrunken credit markets to snap up global assets that will help feed China's enormous appetite for energy.

Chief Executive Officer, Financial Derivates Limited, Mr. Bismarck Rewane told THISDAY yesterday that the incursion of the Chinese firm in the Nigerian petroleum industry is bound to favour the Chinese and not Nigerian .

"As far as I'm concerned, the acquisition is bound to benefit the Chinese firm that is acquiring Addax Petroleum because all they want is to expand their interests in the region," he said.

However, Chief Executive, Biodun Adedipe and Associates, a Lagos-based economic analyst, Dr. Biodun Adedipe noted that the business deal can only be appreciated when details of the investment proposal are made public.

According to him, "It is possible that the Chinese investors have additional capital which they want to deplore to capture more grounds in other parts of the world, given the fact that they were not badly battered by the recent global economic crisis that caught other economies like America and parts of Europe napping. "I believe the Chinese has more capital to invest in Nigeria," he said.