PetroChina parent joins Sudan oil venture
CNPC entrenches position as top foreign investor in country targeted over rights
China National Petroleum Corp, parent of listed PetroChina, has joined five partners to sign an oil exploration contract with the Sudanese government, despite increasing criticism from United States activist groups on its involvement in the country.
The investment came less than two months after Fidelity Investments, the world's largest mutual fund firm, was found to have sold 90.6 per cent of its American depositary receipt holdings in PetroChina amid pressure from US activist groups on institutional investors to divest their shares due to CNPC's heavy investments in Sudan.
PetroChina's largest independent shareholder, US billionaire Warren Buffett's Berkshire Hathaway, was also one of the activists' targets but at the behest of their chairman, shareholders in May voted down a proposal to divest PetroChina shares.
CNPC is the largest foreign investor in atrocities-inflicted Sudan, where government-backed militias have been accused of committing genocide in the country's Darfur region.
'I think from the Chinese government's point of view, energy security is of paramount concern,' said Standard & Poor's analyst Lorraine Tan. 'Besides, it has already invested so much in Sudan and for so long, it would be hard for it to stop investing there.'
The Ministry of Commerce in a statement yesterday said that state-owned CNPC signed a 20-year exploration risk and production sharing contract on exploration block 13 in Sudan, Africa's largest nation.
The exploration will last six years, in an area of 38,200km spanning from the northeastern coast of the nation to the Red Sea, of which 22,000 km is offshore. The total area amounted to 1.52 per cent of Sudan, the world's 10th-largest nation by geographical size.
'China National Petroleum Corp will take a stake of 35 per cent to 40 per cent in the project,' Hao Hongshe, an official with the Economic and Commercial Counsellor's Office of the Chinese Embassy in Sudan, told AFP by phone.
CNPC's partners included Indonesian state oil firm Pertamina, Sudan National Petroleum Corp (Sudapet), Sudan's Dindir Petroleum International, Nigeria's Express Petroleum & Gas and Africa-Energy, the ministry said.
CNPC, Pertamina and Sudapet will be the project's joint operators, responsible for exploration work. The investment amount was not disclosed.
CNPC recorded crude oil output of 16.38 million tonnes from its Sudan projects in 2005, primarily from 40 per cent-owned Greater Nile Petroleum Operating Corp which has been pumping oil from oil blocks one, two and four since 1999.
Output is set to rise rapidly as blocks three and seven came on stream a year ago and are expected to reach a combined output of 10 million tonnes next year. The mainland last year imported 4.84 million tonnes of crude oil from Sudan, the eighth-largest crude exporter to the mainland, accounting for a 3.3 per cent share. Sudan is key to China's strategy to develop oil sources in Africa to reduce reliance on the Middle East.
PetroChina is building a refinery in Qinzhou, Guangxi Zhuang Autonomous Region, which will have the capacity to process 10 million tonnes of crude from Sudan annually.