"We like the potential upstream asset acquisition in Nigeria because it could help Sinopec replenish its dwindling oil reserves and improve the firm's overall profit margin amid sustained high oil prices in the long term," said Gordon Kwan, a energy research analyst at Mirae Asset Securities Ltd. in Hong Kong, told Bloomberg News.
Energy companies backed by the Chinese government are looking for oil and natural gas reserves to help fuel the regional economy. Companies like the China Petroleum and Chemical Corp., known also as Sinopec, are looking to African reserves, where government control is less strict compared to North American or European economies.
Unnamed sources familiar with the matter were cited by Bloomberg News as saying Sinopec was on the verge of a $2.4 billion deal with French supermajor Total to take on oil blocks in Nigeria. Total is looking to raise cash for new oil and natural gas projects by selling as much as $20 billion worth of assets.
Sinopec had crude oil reserves of around 2.8 billion barrels last year, down from 3.3 billion barrels reported in 2007.