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Report: Sinopec mulls takeover of Canada's Addax

(Agencies)
Updated: 2009-06-09 13:46

SHANGHAI -- Chinese refiner Sinopec is in preliminary talks on acquiring Canadian oil and gas exploration company Addax Petroleum Corp., reports said Tuesday.

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Addax, whose shares are listed in Toronto and London, issued a statement noting speculation over a possible acquisition after its shares soared Monday.

"Addax Petroleum acknowledges that it has held preliminary discussions with third parties expressing an interest in a potential transaction with the corporation," it said without naming Sinopec or any other names.

It said there was no assurance the talks would succeed and that the company would not issue any further comments unless a deal is reached.

Chinese newspaper China Business News, citing unnamed Sinopec sources, reported Tuesday that the takeover would be worth about $8 billion. However, reports of earlier acquisition overtures valued the company at about $3 billion.

Beijing-based Sinopec, whose formal name is China Petroleum & Chemical Corp., is the country's biggest refiner by capacity.

It urgently needs to expand its upstream international assets to help cushion against spikes in global crude oil prices that have caused it to post billions of dollars in losses in recent years due to caps on domestic fuel prices.

Earlier this year, unconfirmed reports named Chinese offshore oil and gas company CNOOC, Japan's Mitsubishi and India's Oil & Natural Gas Corp. as potential suitors for Addax.

Sinopec's shares were down 1.1 percent at 10 yuan by late Tuesday morning. Addax's shares surged 10.4 percent Monday to 39.75 Canadian dollars ($35.50). The company's shares have more than tripled since hitting an annual low of C$12.13 in late November.

Addax's oil and gas exploration and production is based mainly in west Africa and the Middle East, including joint operation of the Taq Taq field in Iraq's self-ruled Kurdish region with Turkey's Genel Enerji.

The company reports it produced 134.7 million barrels a day of crude oil in the first quarter of this year.