China Petroleum and Chemical Corp, also known as Sinopec Group, the country's largest refiner, announced on Nov.15 it has officially completed the acquisition of one-third of Apache Corp's Egypt oil and gas business.
On Aug 30, Sinopec and Apache had launched a global strategic partnership, with the Chinese company paying $3.1 billion in exchange for a one-third participation in Apache's Egypt oil and gas business as a first step.
As an independent US upstream oil and gas company, Apache has 24 contractual blocks in Egypt, mainly located in Egypt's west desert.
Its operations including exploration are not affected by political activities, said the company.
"Sinopec's technical expertise is in a position to complement Apache's 20-year operational experience in Egypt," said Fu Chengyu, chairman of Sinopec.
The transaction marks Sinopec's first entry into Egypt's oil and gas market and will further increase the company's experience and capabilities in overseas oil and gas exploration, he said.
Since Sinopec started its business by providing oilfield drilling engineering services in 1993 in Africa, the company had started operations in 15 countries in the region by the end of 2012, covering upstream exploration, downstream refining and oil products trading.
The company has total assets of $22 billion in Africa so far, according to Sinopec.
The transaction became effective on Jan 1, 2013, through which the Chinese business is expected to increase its daily production by 130,000 barrels equivalent to 6.5 million tons of oil a year, during the peak season.
The remaining proved and probable reserves of Apache's Egypt operations by Dec 31, 2012, contained 641 million barrels of oil and 3.79 trillion cubic feet of natural gas, according to an estimation of Sinopec.
"Chinese companies have been developing well in Africa in recent years. However, many countries in Africa are not politically stable, which raises the risks for foreign investment, especially in energy sectors that involve huge capital. Consequently, the Chinese companies need to review their political risks thoroughly in addition to technological risks," said Wang Zhen, deputy head of the China University of Petroleum.
Just two days before, PetroChina Co Ltd, China's biggest oil and gas producer, signed an agreement with Brazilian state oil firms and Petrobras SA to pay $2.6 billion to acquire all the shares of Petrobras' Peru unit.
PetroChina will gain 100 percent ownership of two Peru oil and gas blocks and 46.16 percent ownership of a third, with the remaining 53.84 percent held by Spanish energy giant Repsol SA.
According to a statement by PetroChina, the three blocks have sizable recoverable reserves. The current output is about 800,000 tons of oil equivalent output annually.
"Chinese energy companies are becoming more mature than before in overseas investments with better understanding of the business environment and projects abroad," said Wang.
"Besides the Middle East and Africa, we have been looking at North and South America and the North Pole for oil and gas resources," said Wang. "It is a trend that Chinese companies are doing a good job in choosing these overseas projects or assets which can fit their global structure and overall strategy better."