China secures big Angola oil deal


The deal is the company's first acquisition of overseas upstream assets and is set to push Sinopec's proven crude oil reserves up by 3.6%, or by 102 million barrels (bbl), with daily crude-oil production rising by 8.8%.

Angola Block 18, a deep-water oil asset in Angola, is divided into an east and west zone and has an average water depth of 1,500 meters. The east zone has been in operation since October 2007, with daily production capacity of 240,000 barrels, while the west zone is at the development phase.

The consistent increase in Chinese oil demand and consumption, but a fall in production, has led the country to increase its imports over the past few years. "The Chinese are willing to do whatever it takes to secure their energy supplies," says Cornelia Meyer, an independent energy expert. "In China's case, if somewhere has the energy it needs, it will secure the minerals in that field."

China's General Administration of Customs recently released its latest Chinese import data for February, showing volumes entering the country jumped by 58% in February year-on-year to reach 4.83 million b/d. This was the second highest crude import level in Chinese history, only surpassed by December 2009 levels, which exceeded 5 million b/d.

Meanwhile, other analysts agree China is looking to diversify its oil imports across all regions and through different deals.

"China is anxious to make sure it does not depend on one place for energy security," says Kingsmill Bond, chief strategist at private investment house Troika Dialog.

Earlier this month, the International Energy Agency (IEA) was forced to revise its global oil demand forecast for the second time this year, following a double-digit upwards surge in China's year-on-year apparent oil demand in January.

Global oil demand has been revised upwards by 70,000 barrels per day (b/d) for both 2009 and 2010 on higher-than-expected non-Organisation for Economic Co-operation and Development data, says the IEA in its monthly Oil Market report.

Global oil demand is now estimated at 85 million b/d in 2009, and is expected to rise to 86.6 million b/d in 2010.
An in-depth article on China's oil outlook will appear in the April issue of Energy Risk and online at or from the first week of April.



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