THE WALL STREET JOURNAL: Cnooc Is Buying a 45% Stake In Nigerian Offshore Oil Field: "Anglo-Dutch giant Royal Dutch Shell took an extra two years and $1 billion to develop the nearby Bonga deepwater oil field, which has reserves of some one billion barrels of oil.": Monday 9 January 2006

HONG KONG -- Cnooc Ltd. announced the $2.27 billion purchase of a 45% stake in a Nigerian offshore oil and gas field, its biggest ever acquisition and a sign China's largest offshore oil company has moved beyond its bitter defeat in last year's battle for Unocal Corp.

Cnooc will invest an additional $2.25 billion toward the $5 billion capital expenditure required to develop the Akpo field that is expected to begin production in 2008. The deal will be financed out of Cnooc's own cash and is expected to be completed in the first half of the year subject to approval by the Nigerian National Petroleum Corp. and the Chinese government, Cnooc said.

"This is a world-class asset and this also feeds into our strategy and is very highly attractive in value," Cnooc Chief Executive Fu Chengyu said in an interview.

Cnooc's success resulted from the misfortune of India's largest oil and gas company. India's Oil & Natural Gas Corp.'s the international-exploration subsidiary, ONGC Videsh Ltd., won the bidding for Nigeria's Akpo oil and gas field in December, only to have the purchase blocked by the Indian government. The Indian cabinet contended the bid of more than $2 billion bid wasn't commercially viable, providing the opportunity for Cnooc to move in.

China's oil companies have been on the prowl globally and have landed successes outbidding competitors in Ecuador, Kazakhstan and now Nigeria as the country tries to secure oil resources to keep up with its booming economic growth. This transaction differs in that Cnooc expects to sell the oil and gas to Europe and the U.S. rather than China, which can acquire energy reserves more cheaply from fields closer to home.

"The added oil supply will help ease up the uncertainty in demand, which has been caused by emerging oil consumers like China and India," said Han Xiaoping, chief information officer at Falcon Power Ltd., an energy consulting firm based in Beijing. "So eventually, it will help improve China's energy security."

China and India have been intensely competing for global oil assets, frequently bidding against each other and helping to drive up the price of oil and gas fields throughout the world. In August, the countries decided to jointly pursue such assets selectively. Last month, a joint venture between India's Oil & Gas Corp. and state-run China National Petroleum Corp. successfully bid for a stake in Petro-Canada's oil field in Syria. India's Petroleum Minister Mani Shankar Aiyar will be leading a delegation to China this week to try to foster more ties and will meet with Cnooc's Mr. Fu.

Cnooc's bold attempt last year to take over Unocal met defeat after Chevron Corp. raised its own bid and some U.S. congressmen tried to block the deal, citing national-security concerns.

The Nigerian deal falls squarely in line with Cnooc's earlier strategy of acquiring stakes in oil and gas fields to build its reserves. It is Cnooc's first acquisition outside Asia and biggest since the 2002 $585 million purchase of Indonesian gas and oil fields from Repsol YPF SA of Spain.

Discovered in 2000, the Nigerian Akpo oil and gas field is operated by Total SA and owned by South Atlantic Petroleum Ltd. South Atlantic is owned by Theophilus Danjuma, a former Nigerian defense minister.

Wood Mackenzie, an energy consultant based in Edinburgh, Scotland, estimated Akpo's recoverable reserves of light-oil condensate at 620 million barrels. At peak production, the fields are expected to produce 225,000 barrels of oil a day, according to Total. Nigeria, the largest oil producer in Africa and 11th biggest in the world according to the U.S. Energy Information Agency, produces about 2.5 million barrels of crude oil a day. Mr. Mackenzie estimates Akpo's natural-gas reserves at 2.5 trillion cubic feet, compared with Nigeria's total estimated natural-gas reserves of 176 trillion cubic feet.

Despite the presence of rich reserves of oil and gas in the oceans off the Niger Delta, even the world's most technically adept oil companies have found themselves struggling against the challenges of lifting oil from such great depths. Anglo-Dutch giant Royal Dutch Shell took an extra two years and $1 billion to develop the nearby Bonga deepwater oil field, which has reserves of some one billion barrels of oil.

Earlier Monday, Cnooc's shares were suspended from trading in Hong Kong pending a "discloseable transaction."

Write to Kate Linebaugh at kate.linebaugh@wsj.com