December 13th, 2008 | Shanghai Daily Sinopec close to getting nod for Canadian deal
CHINA Petrochemical Corp, the nation’s second-biggest oil producer, is close to getting state approval for its C$1.9 billion (US$1.5 billion) takeover of Tanganyika Oil Co, a company official said yesterday.
The transaction is proceeding smoothly and approval should come “soon,” Rui Handong, an official with China Petrochemical unit, Sinopec International Petroleum Exploration and Production Co, which is making the bid, told Bloomberg News. Rui didn’t elaborate.
China Petrochemical, known as Sinopec Group, earlier this month extended the takeover dateline because it needed more time to get government approvals. The parent of China Petroleum and Chemical Corp offered to buy Tanganyika at C$31.50 a share in cash in September. Shares of the Vancouver-based company stood at C$27 as of Wednesday.
“We don’t foresee any obstacles blocking Chinese oil companies from getting approval from the state government for overseas acquisitions,” Qiu Xiaofeng, an oil analyst with China Merchants Securities Co, said. “It’s the best time to speed up energy-asset purchases with crude-oil prices slumping.”
Sinopec Group will extend the expiry date of the offer until next Friday, the Chinese company and Tanganyika said in separate statements last week. Sinopec Group will need to pay a so-called break-up fee of C$65 million if it fails to get relevant state approvals by December 24, Tanganyika said in September.
Buying Tanganyika, partly owned by Sweden’s Lundin family, would boost output at Sinopec Group by about 2 percent, helping it to meet demand in China. Chinese firms are raising their search for overseas resources after commodity prices, including coal and oil, fell from records in July.
Tanganyika holds operating stakes in two Syrian production-sharing agreements covering the Oudeh and Tishrine/Sheikh Mansour blocks after expanding from Tanzania in 1996. The company is 14 percent owned by the Lundin family, which also holds stakes in companies such as Lundin Petroleum AB and Lundin Mining Corp.