CPC Corp., Taiwan (??), the state-owned oil supplier, has handed over half of its oil exploration project in Chad to China CEFC Energy Co. (??????) in a bid to reduce possible risks associated with the project and lower the Taiwanese firm's financial burden.
According to the transfer agreement between CPC and China CEFC Energy, the Chinese firm spent US$114 million to take over 35 percent of the oil exploration rights to the Chad project from the Taiwanese oil supplier.
After the transaction, CPC now owns 35 percent and China CEFC Energy has gained an additional 35 percent of the exploration rights to the Chad project, while the African country still keeps the remaining 30 percent, the Taiwanese oil firm said.
Chad is one of the major oil-producing countries in Africa. CPC began to seek oil exploration deals in Chad in 2003.
Taiwan and Chad signed a preliminary agreement on cooperation in oil exploration in 2004 as Taipei was striving for energy self-sufficiency. In 2006, CPC signed formal oil fields and joint operations contracts with Chad to secure its rights to prospect for crude oil in the Central African inland country.
According to CPC, the Chad project is scheduled to start to produce oil in 2017.
Chang Ray-chung (???), vice president of CPC, said, however, that his company aimed to reduce overseas investment risks and decided to transfer half of the oil exploration rights in the Chad project to China CEFC Energy.
Chang said that the Chad project is faced with some economic risks at a time of weakness in the global oil market recently. In addition, rising riots caused by militants in Chad has raised political risks in the African country.
He said that since 2007, CPC had been seeking a possible deal to transfer part of its oil exploration rights in the Chad project, stressing that such a transaction is not rare at all in the global oil industry.
Citing statistics compiled by Ernst & Young, CPC said that the number of similar exploration rights transfers topped 1,500 in the world oil market during the period of 2010-2015. Transactions exceeded US$140 billion during that period, CPC said.
He said that CPC had been in talks with China's China National Petroleum Corp. (CNPC, ????), Emperor, Fourwing and United Hydrocarbon of Canada, India-based Focus Energy, China CEFC Energy and Malaysia's Petronas.
After the negotiations, CPC decided to sign a deal with China CEFC Energy since the Chinese firm offered the best bid among the potential suitors. The transfer deal has been completed after securing regulatory approval.
Source: Focus Taiwan News Channel