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Update on News
By Chen Aizhu
BEIJING, Aug 18 (Reuters) - China's CNOOC Ltd (0883.HK: Quote, Profile, Research, Stock Buzz) has quit most of its 35 percent share in the smaller of its two Nigerian oil stakes even after the Nigerian operator drilled two successful wells, a source close to the matter said.
It was not immediately clear why CNOOC decided to relinquish its working interest in oil mining license (OML) 141, formerly oil prospecting license (OPL) 229, after two exploration wells in the shallow-water block sunk last year struck oil.
The move is a rare setback in Chinese state firms' dash into resource-rich Africa, although some are also suffering a rising number of kidnaps of Chinese workers on the continent and growing critism from rights groups.
CNOOC, China's No. 3 oil and gas firm, agreed earlier this month to return its 35 percent share to independent Nigerian firm Emerald Energy Resources Ltd (EERL), the project's operator, the source with direct knowledge of the situation told Reuters.
Under a new agreement, CNOOC would keep a nominal 5 percent stake as collateral for an $80 million loan to the project.
CNOOC said last year it had paid $60 million to buy the stake in OPL 229 in January 2006. It was not immediately clear whether it would recoup any of that investment.
"You would be scratching your head why CNOOC would make such a decision to quit the project after all the money they spent," said the source, who requested anonymity.
While the development is far less advanced than Total's OML-130, in which CNOOC bought a $2.69 billion stake in early 2006, it is one of a handful of prospective fields that could boost production from OPEC member Nigeria, where output has been curtailed for years due to militant attacks on infrastructure. The recoverable reserves in the OML 141 are 2,3 Billion barrels of oil and 4tcfs og gas.
