China seeks a sixth of Nigeria’s oil reserves
China is seeking to massively expand its African oil reserves by bidding for up to a sixth of Nigeria’s crude reserves, according to a leaked letter from the office of the President of Nigeria.
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By Peter Foster6:18AM BST 29 Sep 2009Comment
The move by CNOOC, the Chinese state-controlled oil giant, to acquire concessions in 23 prime blocks could create conflict with western oil groups including Shell, Chevron, Total and ExxonMobil who already own stakes in the blocks.
If all CNOOC’s bids were accepted they would double China’s oil reserves in Africa where China has sealed a number of successful oil-for-infrastructure deals in recent years in countries like Angola and the Democratic Republic of Congo.
The letter, dated August 13 and published by the Financial Times newspaper detailed talks between CNOOC’s representative in Nigeria, Sunrise, and the office of Nigeria’s President Umaru Yar’Adua.
While rejecting CNOOC’s initial offer – rumoured to be between $30bn-$50bn (£18bn-£31.4bn) and it added: “Your interest in all the listed blocks will be considered if your revised offer is favourable.”
It remains unclear from the letter whether the 49pc stakes CNOOC is seeking would come from the holdings of western oil major or their joint-venture partner, Nigeria’s state owned oil company.
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A spokesman for President Yar’Adua confirmed that negotiations with Sunrise/CNOOC and “all other” industry stakeholders were ongoing, adding that “the federal government has not taken any final position on the issue.”
A cash-rich China has used the global financial crisis as an opportunity for a strategic expansion in oil and other commodities that it needs to fuel its rapidly expanding economy.
Nigeria’s parliament is currently debating a bill to restructure the country’s energy sector which is riddled with corruption and in desperate need of investment.
However any deal between Nigeria and China would have to overcome a number of political hurdles following a number of failed oil-for-infrastructure deals with the previous administration which became mired in damaging corruption allegations.
Those difficulties have led some analysts to speculate that the Nigerian authorities might be using the Chinese offer to extract more favourable terms from western companies already holding concessions.
China’s popular image in Nigeria was damaged by recent reports that China had requested permission to cremate 30 Nigerians who had died in Chinese jails after being arrested on fraud, immigration or drugs offences.
A committee of Nigerian MPs responded by calling on Nigeria’s government for a tit-for-tat investigation into the immigration status of the 20,000 Chinese estimated to be resident in Nigeria.
Abike Dabiri-Erewa, the head of the House of Representatives Committee on the Diaspora, told a press conference that Nigeria could no longer accept a situation where its people were being “maltreated and dehumanised abroad”.