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Sinopec overseas crude output rises after Addax buy

By Wan Zhihong (China Daily)
Updated: 2009-12-12 07:29

China's second largest oil company Sinopec said on Friday it expects overseas crude oil output to account for 17 million tons in its total output of 60 million tons for this year.

The acquisition of Addax Petroleum Corp this year has boosted the company's overseas oil production to a large extent, company spokesman Huang Wensheng said in Ningbo, Zhejiang province.

At present Sinopec is operating in 35 overseas projects, which are largely in Africa, South America, the Middle East and Russia, said Huang.

Overseas crude oil output of the company was 9.01 million tons in 2008, Sinopec said on its website.

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In August Sinopec completed the $7.9 billion takeover of the Geneva-based Addax Petroleum Corp, gaining reserves in Iraq's Kurdistan and West Africa. It is so far the largest overseas acquisition by any domestic company in the country.

Commenting on media reports that Sinopec is considering a joint bid for Dutch chemical maker LyondellBasell, Huang said the company did not consider the bid.

"Such a deal does not fit it in with our strategy," he said.

Chinese energy companies have spent at least $13 billion on overseas assets since December last year, Bloomberg reported. They are taking advantage of lower valuations caused by the global economic slowdown.

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, will speed up overseas acquisitions in regions such as Africa and South America, in a bid to boost China's quest for energy security, said a company executive who asked not to be named.

Currently, the company is in talks with foreign partners for several deals, he said.

The financial crisis has presented CNPC with opportunities to take advantage of low valuations, said company vice-president Zhou Jiping.

Some analysts have suggested that domestic companies should form some alliances with foreign firms to undertake overseas deals. "Such cooperation also reduces risks," said Lin Boqiang, professor, Xiamen University.