The offers appear designed to capitalise on uncertainty in Nigeria’s oil industry. Chinese groups are challenging the dominance of western groups, which are resisting plans to impose tougher terms.
Securing close to a third of the Exxon venture’s 720,000 barrels a day output would more than double China’s share of Nigerian production, adding to the African crude it has snapped up to fuel its fast-expanding economy.
Industry analysts estimated the joint venture’s reserves at between 1.6bn and 2bn barrels, with potential for more.
Sunrise, a previously little-known energy company, led last year’s audacious plan for China’s state-owned CNOOC to acquire one-sixth of Nigeria’s 36bn barrels of oil reserves for up to $50bn. Exxon blocks were among the 23 targeted.
Subsequent correspondence from September between Sunrise and Emmanuel Egbogah, presidential special adviser on petroleum matters, a copy of which was obtained by the Financial Times, indicates the government was prepared to part with a 19 per cent stake in the Exxon venture.
However, the government appeared to be seeking a higher price than the $3.2bn which a person close to Sunrise said the company had offered. Mr Egbogah said last month that talks on Chinese oil acquisitions in Nigeria had made little progress since October.
Separately, Sunrise has in recent weeks informally approached Exxon with regards to purchasing 10 per cent of the venture from the US group for $1.6bn, people familiar with the situation said. Sunrise declined to comment. Three industry insiders said Exxon would be highly reluctant to sell part of one of its most important sources of production. Exxon said: “We do not disclose details of business discussions.”
However, with western energy groups, Asian powers and the government engaged in high-stakes brinkmanship, few options are off the table. The government is sorely in need of cash – from old investors or new – to fund a widening budget deficit. Proposed reforms designed to reverse years of underinvestment in the industry would also raise taxes and royalties for oil companies. Some western groups have warned of dire consequences for an industry on which Nigeria depends for 80 per cent of its revenue. Reporting by FT