Chinese-Angolan company proposes to pay US$2.2 billion for two Angolan oil blocs

10 May 2006

Luanda, Angola, 10 May – Sonangol Sinopec International (SSI), owned by Angola and China is prepared to pay US$2.2 billion for the oil concession on the remaining areas of blocs 17 and 18 off the coast of Angola, officials said.

SSI, which is a joint venture between Angolan state oil company Sociedade Nacional de Combustíveis de Angola (Sonangol) and China Petrochemical Corporation (Sinopec), competed for the two concessions, presenting a proposal of US$1.1 billion for each of them as a signing bonus.

The figures were made public on Tuesday evening in Luanda, at the ceremony to open the proposals for the tenders for new oil concessions in the remaining areas of blocs 17 and 18, both in deepwater areas.

The oil reserves of bloc 17 are estimated at 1 billion barrels, while reserves at bloc 18 may total around 3 billion barrels.

SSI, which was recently created as part of the agreement for financing of the Lobito Refinery, plans to take on the entire capital of each of the new concessions, and proposes to drill 10 test wells.

SSI’s proposal, which sets a new world record for this type of tender, also includes an investment of US$100 million in social projects.

In total, 19 proposals were put forward for the two new concessions, with Falcon Oil, Vudes and ESSO, as well as SSI, being the only companies to make bids for both blocs.

For the remaining are of bloc 17, France’s Total put forward a proposal of US$670 million as a signing bonus and plans to take on the entire capital of the concession.

Bloc 17 also received bids from Partex Oil and Gás (US$600 million) and Prodoil (US$400 million), amongst other companies.

For the remaining area of bloc 18 Brazil’s Petrobras put forward a prposal of US$276.5 million as a signing bonus, while US company Chevron’s bid totaled US$271 million, with all other proposals at lower figures.

Sonangol is the concession holder of prospecting, survey, development and production rights for liquid and gas hydrocarbons in the whole of Angola.

Angola is the second-largest oil producer in sub-Saharan Africa following Nigeria, and produces around 1.4 million barrels of oil per day.

The country’s oil reserves are estimated at around 12 billion barrels and the Angolan offshore area is divided into 74 blocs, in shallow, deep and ultra-deep waters.

Officials estimate that in 2008 daily oil production will stand at around 2 million barrels, but this value could be reached in the next year as new wells go into operation. (macauhub)