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Exclusive: China's Sinopec looking to sell Nigeria business - sources

Reuters  |  LONDON/HONG KONG 

By Clara Denina , Julie Zhu and Ron Bousso

LONDON/(Reuters) - China's Group has hired to sell its business in and Gabon, three people with knowledge of the matter said, as the state-owned giant pares back its presence in

and other groups including National Petroleum Corporation and CNOOC made large acquisitions between 2009 and 2013 with the help of low-cost loans from Chinese state-owned banks.

The hunt for overseas assets was intended to bulk up their energy reserves and meet future demand from China, the world's second-largest economy.

But prices fell to about $27 a barrel in 2016 from more than $100 in 2014, making some of these investments unprofitable. Benchmark Brent is now trading at more than $60.

Militants have also recently attacked and gas facilities in Nigeria, further discouraging China's economy, which was growing strongly when the company expanded, has also slowed.

"is trying to sever ties," one of the people told "It has hired BNP to sell (its) assets in and Gabon."

A spokesman did not respond to requests for comment and a spokeswoman declined to comment.

spent $7.24 billion in 2009 for Switzerland-based Addax Petroleum, its largest ever foreign acquisition, to secure land in Nigeria, Gabon, Cameroon and Iraq that was licensed for extraction and exploration.

It offered considerable potential as commodity prices rose but bankers expect the and Gabon assets to sell for less than $1 billion.

The sources said was planning to sell Addax's onshore and offshore and gas production sites in and Gabon. Sinopec's Cameroon operation would be its only remaining project in

"We've already seen several Chinese companies divest some of their overseas assets," said a second person, who asked not to be named. "At the current prices, such investments (are not) economically viable for Chinese companies."

The sources said had also decided to sell Addax after a recent bribery investigation by Geneva prosecutors into payments made in

Addax agreed to pay 31 million Swiss francs to settle the bribery charges, for which its executive officer and legal director had also been charged, and shut its offices in Geneva, Houston and Aberdeen.

At the time, Addax said its parent company was closing the offices in response to low prices and did not comment on the investigations at the time.

The spokeswoman did not respond for a request for a comment on whether this was a reason for the sale.

MILITANT ATTACKS

Nigeria, Africa's largest economy, fell into recession for the first time in 25 years in the second quarter of 2016, after militant groups attacked and gas facilities in its Delta region. That cut the country's production dramatically.

Lower crude exports, Nigeria's mainstay, meant less money in government coffers, especially the U.S. dollars needs to import essential products and keep businesses running.

The latest group of militants to emerge in the Delta earlier this year also threatened that facilities belonging to major international companies would be destroyed.

Sinopec's assets in and Gabon could attract the interest of companies already operating in the region including Perenco, which bought Total's assets in Gabon for $350 million earlier this year, and Kosmos Energy, the sources said.

One of the people who spoke to said that was looking to sell some of the Chinese company's other exploration and drilling businesses outside because of falling prices and regional political instability.

has also agreed to sell its business in Argentina for $500 million to $600 million to Mexican company Vista & Gas, according to sources, in part because of social unrest there.

($1 = 1.2680 Canadian dollars)

(Additional reporting Chen Aizhu in Beijing; Editing by John O'Donnell and Anna Willard)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, December 06 2017. 20:00 IST
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