Chinese group buys Ecuador oil assets
EnCana Corp. is selling its oil assets in Ecuador to a Chinese consortium for US$1.42 billion in a deal it said reflects more its own plans to focus on North America than the Andean country's political instability, Reuters reported.
The deal with a consortium led by Chinese giant CNPC leaves rival Indian bidder ONGC out in the cold on a major deal for the second time in less than a month. The two nations are locked in an intensifying battle for oil assets to fuel their booming economies.
Encana has been trying to sell the assets for more than a year, but was holding out for a better price.
EnCana, North America's biggest independent oil explorer, said the price was near the middle of its target range, and equal to the net book value of the production and pipeline business.
In May, people familiar with talks told Reuters EnCana wanted $1.5 billion, while bids were likely come in at about $1.2 billion from the CNPC grouping and India's Oil and Natural Gas Corp. (ONGC). That was when crude oil was priced at about $55 a barrel, some 13 percent below this week's levels above $63.
CHINA 2, INDIA 0
The buyer is a group called Andes Petroleum, which includes CNPC, the parent of PetroChina, the world's fifth-largest listed oil firm. In August, CNPC beat ONGC to Canadian-based PetroKazakhstan, agreeing to acquire it for $4.2 billion.
The CNPC consortium will acquire about 75,000 barrels a day of production from five blocks and a 36 percent stake in the OCP pipeline, a new 450,000 barrel a day export line that EnCana spearheaded.
The oil fields' proved reserves are pegged at 143 million barrels.
The price was close to investors' expectations, given Ecuador's recent political turmoil and EnCana's occasionally strained relations with some government departments, said Wilf Gobert, analyst with Peters & Co. Ltd.
"Ecuador is tough economic jurisdiction. There has been recurring issues regarding taxation and government take," Gobert said.
Last month, violent demonstrations curtailed oil exports
from Ecuador, the second-largest South American supplier to the United States
after Venezuela. Protesters demanded oil companies invest more in the
communities where they drill.