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China Oil Giant Reaches Deal to Buy Major Stake in Nigerian Oil Field


The giant Chinese state-owned China National Offshore Oil Corporation, CNOOC, has reached a deal to buy a 45 percent stake in a Nigerian oil field for more than $2 billion. The purchase, if approved by both governments, would be China's first major venture into oil-rich Nigeria.

The deal is part of China's bid to look for other energy sources to quench a mounting thirst for oil caused by its rapidly expanding economy.

Energy will be high on the agenda when Chinese Foreign Minister Li Zhaoxing visits Nigeria next week as part of a West African tour. Foreign Ministry spokesman, Kong Quan, on Tuesday said China is looking to expand its partnership with the West African nation, which is the world's eleventh largest producer of oil.

Kong says the Chinese and Nigerian governments will sign two important agreements: one on economic and technology cooperation and a memorandum of understanding on developing a strategic partnership.

CNOOC's bid to buy into the Nigerian oil field comes after its attempt to buy a major U.S. oil company failed last year. American lawmakers blocked the bid, citing security concerns.

Analysts say the Nigerian bid will not be easy for CNOOC, which has no experience in dealing with Nigeria - a country rated as a difficult place to do business. The international anti-corruption group Transparency International ranks the country as the sixth most corrupt nation in the world.

James Brock is an independent energy consultant based in Beijing. He says western oil corporations with much more experience have faced serious challenges, and he says he expects CNOOC's experience to be no different.

"The western companies such as Shell and Chevron did not bid on this block and that would imply they didn't believe the values were there," he said. "So this is certainly a hurdle which CNOOC will have to overcome."

India last month blocked a bid for the same stake by its state-owned Oil and Natural Gas Corporation, saying it was not commercially viable.

Energy analysts say that in many ways, China has no choice but to take such risks as its energy needs continue to mount.

The need for new oil sources is also driving China to strengthen ties with the left-wing president-elect of Bolivia, Evo Morales, whose country has vast gas reserves. Mr. Morales, who has pledged to nationalize the Bolivian gas industry, visited Beijing this week and received Chinese assurances of aid and trade deals.

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