Cnooc Ltd., China's biggest offshore oil producer, said it will pay $2.268 billion in cash for a stake in a Nigerian offshore oil field to meet demand in the world's fastest-growing market.

Cnooc will buy a 45 percent stake in Nigeria's OML 130 oil area, also known as the Akpo field, from privately owned Nigerian company South Atlantic Petroleum Ltd., Chairman Fu Chengyu said today during a conference call with investors. Cnooc in August abandoned an $18.5 billion bid for Unocal Corp. amid opposition from U.S. lawmakers. ``It's good news that Cnooc is still pursuing acquisitions to expand their output,'' said Liu Yang, who helps manage $1.8 billion of Asian assets, including Cnooc shares, at Atlantis Investment Management in Hong Kong. ``They need to acquire assets to expand and the management is keeping to the goal.'' Chinese oil companies are seeking acquisitions abroad as domestic fields fail to keep pace with demand, which more than doubled in a decade. The world's most populous nation is clashing with No. 2 India, whose government last month blocked state-run Oil & Natural Gas Corp. from buying the Akpo stake because of concern over ownership at South Atlantic. Beijing-based Cnooc, whose shares were suspended from trading on the Hong Kong stock exchange today, closed unchanged at HK$5.40 a share on Friday, having gained 38 percent in 12 months. The Akpo field, about 200 kilometers (124 miles) off the coast of Port Harcourt, will pump 225,000 barrels a day after 2008, or 9 percent of Nigeria's current production, according to operator Total SA. South Atlantic Total, based in Paris, holds 24 percent of the field and Brazil's Petroleo Brasileiro SA owns 16 percent. The rest is held by South Atlantic and state-owned Nigeria National Petroleum Corp. Oil & Natural Gas Chairman Subir Raha had sought the Nigerian field to help offset declining output from domestic fields. India's Cabinet rejected the proposal because of a lack of clarity in ownership at South Atlantic Petroleum, a senior oil ministry official involved in the transaction said in New Delhi Dec. 16. Nigeria is among the world's eight most-corrupt nations, according to Berlin-based Transparency International. Theophilus Danjuma, previously Nigeria's defense minister and a former army chief, is one of the owners of South Atlantic. The company gained its stake in the Akpo field during the regime of General Sani Abacha, who took power in a military coup in 1993 and died five years later. `Not for Faint-Hearted' Indian Finance Minister P. Chidambaram, speaking to reporters in New Delhi Dec. 16, didn't say why the government rejected the Nigerian investment. ``It's not for the faint-hearted,'' said Gavin Thompson, the Beijing-based country manager at energy consultants Wood Mackenzie. ``It's difficult to develop the field because of the uncertainties over the taxation and ownership. The size of the field is big with a significant amount of value and reserves.'' Shareholders of Cnooc on Dec. 31 defeated a plan that would have given its state-owned parent more control over overseas acquisitions. The proposal to end the publicly traded unit's priority right to make takeovers for the group was opposed by 59 percent of independent shareholders. Cnooc's board proposed that the parent make the riskier investments for the group, reducing the influence of minority shareholders on its expansion strategy. Government Backing The government has encouraged Cnooc and the nation's two biggest oil companies, PetroChina Co. and China Petroleum & Chemical Corp., to buy overseas oil reserves as the nation's demand more than doubled in a decade. India lags behind China in acquiring oil and gas assets as the world's two fastest-growing major economies seek energy supplies to support future expansion. Oil & Natural Gas lost out to Chinese companies that agreed to pay $5.6 billion for assets in Kazakhstan and Ecuador. After losing the two bids, India last month tied up with China National Petroleum Corp., PetroChina's parent, to bid for Petro-Canada's 38 percent stake in Syria's Al Furat Petroleum Co. India and China, the world's fastest-growing major economies, need to make more joint bids for overseas oil exploration and production ventures, Indian Oil Minister Mani Shankar Aiyar said in an interview today. He is scheduled to travel to Beijing today to meet with Chinese officials to discuss more such joint bids for energy assets overseas. `Year of Friendship' India has named 2006 a ``year of friendship'' with its Asian neighbor and it has a ``high level of confidence'' that China will cooperate on joint acquisition of oil and gas fields overseas, Aiyar said in a telephone interview from New Delhi. ``Given that China and India are not only two of Asia's biggest countries, but also two countries that are in need of securing energy from abroad, I would imagine that there is a vast field of cooperation which needs to be explored between the two governments,'' Aiyar said. China National Petroleum in September outbid Oil & Natural Gas in buying assets of EnCana Corp. in Ecuador for $1.42 billion. In August, the Chinese company beat India by agreeing to pay $4.18 billion for PetroKazakhstan Inc. ``We allow our public sector companies to operate on their own, subject to certain clearances being obtained from the government of India and in the case of South Atlantic Petroleum the government didn't give that permission,'' Aiyar said today. ``I am not in a position to discuss all this in public with you. The decision was taken after due consideration by the Cabinet.'' India and China, which account for a third of the global population, are currently registering the fastest economic growth among major global economies of more than $500 billion. PIN/BLOOMBERG
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