Addax signs 10-year Gabon petroleum deal

Addax Petroleum Corp, the biggest overseas subsidiary of Sinopec Group, has won a 10-year contract to extract oil at three fields in Gabon.

At peak production, the company will account for about 20,000 barrels a day, or nearly one-eighth of the African country's oil output.

"We have concluded negotiations in a mutually beneficial way, and I think this is a sign that our performance has been recognized and Chinese investors have been welcomed by the Gabonese Republic," Zhang Yi, chief executive officer of Addax Petroleum, said in a telephone interview on Monday.

Zhang said the production-sharing agreement was reached on Jan 14 after a year of negotiations. The contract covers three oil fields: Tsiengui, Obangue and Autour.

Although he didn't give details, Zhang said the contract has "clear financial and technical objectives" that will maximize the return for Gabon.

He said annual total output from the three fields will surpass 1 million metric tons. Addax Petroleum accounts for nearly one-third of Sinopec's overseas output.

Geneva-based Addax Petroleum was acquired by Sinopec five years ago. Its strategic focus is on Africa, the Middle East and the North Sea.

In Africa, its major operations are in Nigeria, Cameroon and Gabon, though it's seeking to expand in other countries.

Addax Petroleum's operations in Gabon became the subject of a dispute with that country's government after a 15-year contract for the Obangue field ended a year ago.

According to Reuters, Gabon had transferred the field to the state oil company, a move that sparked a $1 billion legal battle in a Paris-based tribunal.

In the meantime, contracts for the other fields were scheduled to end in 2015.

"When the dispute over Obangue occurred, we decided to secure a longer, stable contract for all three fields that would benefit all sides," said Zhang.

Zhang said the combination of flexibility from the Chinese investors, the professionalism of his Addax Petroleum team and the vision of Gabon's government led to a successful outcome for all parties.

Zhang pledged that Addax Petroleum will continue to take a long-term approach in Gabon, with full transparency and in compliance with Gabonese laws and regulations.

Zhang said the successful conclusion of the negotiations will also help attract more Chinese companies to invest in infrastructure construction, industrial expansion and mineral exploration in Gabon, which has a population of 1.5 million.

In 2012, bilateral trade exceeded $1 billion.