AFRICAN Petroleum has agreed to a non-binding deal that could bring in PetroChina as an investor in some of its promising West African oil and gas exploration activities.
The company today said PetroChina, one of the world's largest oil companies, has been given an exclusive period through to the end of August by which time it may agree to invest in as much as 20 per cent of Block LB-09 in Liberia, and exploration blocks in the Ivory Coast, Gambia, Liberia, Senegal and Sierra Leone.
African Petroleum said the potential value of the deal has yet to be finalised, and remained subject to government, regulatory and other approvals. A person familiar with the matter had previously said a deal could be worth at least $US1 billion.
The news fired up shares of African Petroleum, which jumped 4.1 per cent at $1.30 on the small National Stock Exchange of Australia. The shares have drifted lower since mid-March, but remain about four times above where they started the year.
Non-executive chairman Frank Timis is African Petroleum's biggest shareholder.
PetroChina, a subsidiary of China National Petroleum, is seeking to become a strategic investor in the West African oil basin, now touted by some companies to become the site of one of the world’s largest deepwater exploration programs.
The Chinese firm in August 2009 signed a $US50bn ($48.82bn) agreement with ExxonMobil to buy liquefied natural gas from the Gorgon field in Western Australia to supply China.
African Petroleum's focus is on Blocks LB-08 and LB-09 offshore Liberia, which cover about 7200sq km, in addition to licences elsewhere along West Africa.
The company in January began drilling the Narina-1 well on LB-09, targeting a prospect similar to discoveries including Jubilee in Ghana and Mercury/Venus in Sierra Leone and which African Petroleum says has the potential for recoverable oil resources of 500m-1.2bn barrels. In February, it announced to the market it had made a significant discovery at the Narina-1 well.