China May Seek Oil Investment in Ghana, Guinea

China May Seek Oil Investment in Ghana, Guinea to Meet Demand

China, the world’s second-largest oil consumer, may be seeking to invest in oil in the Western African states of Ghana and Guinea to help fuel its economy and bolster energy security.

China National Offshore Oil Corp. is in talks with Ghana National Petroleum Corp. to make a bid for a stake in the Jubilee oilfield discovery that would rival Exxon Mobil Corp.’s $4 billion offer, the Wall Street Journal said, citing unnamed people familiar with the situation. A Chinese fund is in dicussions with Guinea on possible financing for infrastructure, minerals and oil projects, the Financial Times reported.

Chinese oil companies have announced plans to spend at least $16 billion to gain access to African energy assets since 2006 to meet rising fuel demand at home. Xiao Zongwei, a spokesman at Cnooc Ltd., the unit that handles China National Offshore Oil’s overseas upstream acquisitions, declined today to comment on the Wall Street Journal report. Kosmos Energy LLC, a U.S. oil explorer backed by Blackstone Group LP and Warburg Pincus LLC, is in talks to sell its stake in Jubilee to Exxon, a person familiar with the negotiations told Bloomberg on Oct. 6.

 A sale would require approval from Ghana’s government, said two people familiar with the process. Ghana is set to become West Africa’s newest oil exporter when output begins at Jubilee, discovered in June 2007. The field may hold 1.8 billion barrels of oil and will produce 120,000 barrels of crude a day, according to London-based Tullow Oil Plc, the project operator. Exxon, based in Irving, Texas, is spending $79 million a day to find new reserves and build oil platforms after output fell in 2008 to the lowest since the 1999 acquisition of Mobil Corp.

 The company, the biggest U.S. oil producer, said Sept. 9 it may fail to meet its 2009 target for 2 percent output growth. Chinese Acquisitions Guinea’s negotiations with the unidentified Chinese fund may be completed by this year, the FT said, citing Guinea Minister of Mines Mohamed Thiam, who added that the talks involve deals worth as much as $7 billion.

 Guinea, Hong Kong-based China International Fund and the Angolan state oil company have signed a “memorandum of understanding” to explore for oil, the paper said. China’s oil consumption doubled in the last decade, rising to 8 million barrels a day last year from 4.2 million barrels in 1998, according to BP Plc’s Statistical Review. The world’s third-largest economy increased net crude oil imports in August to the second highest on record to meet fuel demand.   

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