China National Petroleum Corp., ChinaÔÇÖs biggest energy company, has agreed to acquire a 35 per cent stake in Royal Dutch ShellÔÇÖs oil and gas unit in Syria, in a deal that could be worth up to $1.5 billion.
Following the deal, the two companies will seek joint investment opportunities in Syria. CNPCÔÇÖs stake may be worth around $1.5 billion if it gets a third of ShellÔÇÖs 23,000 barrel-a-day output over the next 20 years.
ShellÔÇÖs Syria unit has interests in three production licensesÔÇöDeir-Ez-Zor, Fourth Annex and Ash ShamÔÇöwhich are operated by the Al Furat Petroleum Company (AFPC) and cover about 40 oil fields. Shell has a 31.25 per cent stake in AFPC.
In a statement, CNPC said: ÔÇ£The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria's upstream industry.ÔÇØ
Shell has had a presence in Syria since the 1940s and been a shareholder in AFPC for some 25 years.
CNPC is also already active in Syria, having been operating there since 2002. It already had an interest in the production licences and in AFPC through its 50 per cent ownership of Himalaya Energy Syria.
Syria's oil production has diminished over the past 10 years, though its gas output has risen. The country has estimated gas reserves of 284 billion cubic metres.
Last year, Chinese companies spent $32 billion on mining and energy acquisitions, securing oil fields, coal and metal mines in Africa, Asia and Australia in order to secure its domestic energy supply. China is the worldÔÇÖs fastest growing economy.
CNPC increased its overseas crude oil production by 12 per cent last year to a record 1.4 million barrels a day, after it added fields in Kazakhstan and Canada to its portfolio.
Last week Shell signed a 30-year agreement with PetroChina, the listed arm of CNPC, and Qatar Petroleum, to search for natural gas in QatarÔÇÖs Block D area.
Headquartered in The Hague, Shell and its companies have operations in more than 100 countries and territories worldwide.
Headquartered in Beijing, CNPC has oil and gas assets and interests in 29 countries in Africa, central Asia/Russia, South America, the Middle East and Asia-Pacific.
