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Chinese firms propose $50 billion oil buy in Nigeria
Published on: 2009-12-09
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NEW DELHI -- Chinese companies have proposed investing $50 billion to buy 6 billion barrels of oil reserves in Nigeria, the African nation's presidential adviser on energy said Tuesday.

"Chinese companies have made proposals to buy reserves in Nigeria. Specifically, their application is to acquire 6 billion barrels of oil reserves, which we are currently discussing," Emmanuel Egbogah told reporters on the sidelines of an industry conference.

Mr. Egbogah declined to name the Chinese companies looking to buy the reserves.

In September the Nigerian government said it was in advanced talks with China's CNOOC Ltd. over signing deals on several onshore oil blocks as the state-run company looks to expand its position in Nigeria by securing drilling rights going unused by Western energy firms.

Nigeria will within three weeks approve major reforms to the oil and gas sector when it passes its Petroleum Industry Bill, which covers both upstream and downstream operations. It includes changes to existing production-sharing agreements between the government and international oil companies.

China, Africa's third-largest trading partner behind the European Union and the U.S., has plans to invest in Africa to secure its energy supplies.

"They are prepared to spend as much as $50 billion," Mr. Egbogah said, when asked on the likely investment by Chinese companies.

He didn't give any timeline for the discussions to conclude.

Mr. Egbogah also said Nigeria plans to adopt some alternative route to meet the funding requirements of Nigeria's oil and gas industry.

"The international oil companies in the existing joint venture arrangements have consistently complained that the government's budgetary allocations for cash call purposes have often and chronically fallen short of requirements over the years," Mr. Egbogah said.

Western oil companies work through joint ventures and production-sharing agreements with Nigerian National Petroleum Corp.

He said the industry is facing a cumulative funding shortfall of $6 billion.

"We are going to some alternative funding mechanism to close the shortfall," he said. "This doesn't include government bonds but includes other type of borrowings. That is what we call alternative funding."

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