Sinopec wins oil contract in Algeria

By Alex Frew McMillan

The Algerian oil deal follows state-backed CNOOC's deals to get gas from Australia and Indonesia

Story Tools

HONG KONG, China (CNN) -- The Algerian government has awarded China's No. 2 oil producer Sinopec the contract to develop an oil field there.

Sinopec will invest $394 million for a 75 percent stake in the $525 million project to develop the Zarzaitine field, according to official news services in China and Algeria.

It is Sinopec's first investment in North Africa. The other 25 percent of the project will be held by state-run Algerian oil producer Sonatrach.

Sinopec beat out Spain's Repsol-YPF in what is expected to be a 20-year investment. It will spend $168 million in the first phase to boost the yield rate of the field, which currently produces 2 million tons of crude oil a year.

Sinopec was the first of China's oil producers to look overseas. It already operates in eight other countries, with a 40 percent share in the Unity field in southern Sudan.

International gas deals

China is increasingly looking to overseas partners to diversify its resources. It has only around 1 percent of the world's oil reserves and around 2 percent of its gas reserves.

But the world's third-biggest energy market is projected to grow at 4 percent a year over the next four years, as the country becomes increasingly industrialized.

Oil producer China National Offshore Oil Corp. (CNOOC) last month bought stakes in liquefied natural gas projects in Australia and Indonesia.

Australia's North West Shelf won that country's largest export contract yet, a $13.5 billion deal to supply a CNOOC terminal in Guangdong province for 25 years. (Full story)

An $8.5 billion deal

In Indonesia, CNOOC is buying a 12.5 percent stake in the Tangguh gas field in Papua.

That field, jointly owned by BP and Indonesian state oil company Pertamina, won an $8.5 billion deal to supply CNOOC's gas terminal in Fujian Province, also for 25 years. (Full story)

China's largest resources company, PetroChina, is in talks with Itochu Corp. of Japan to build a gas plant in Indonesia and is mulling other investments there.

Sinopec stock is down 0.79 percent on Thursday afternoon, at HK$1.25, on a day the Hang Seng index is off 1.4 percent.

Nikkei rebounds to above 10,000 • Japan talks trade at ASEAN summit • Japan-Thailand move on trade talks • China, U.S. lead oil demand boom

CNN/Money: Security alert issued for 40 million credit cards • Bin Laden deputy sends message • U.S. House votes to keep U.N. dues • Iran poll to go to run-off