Sinopec plans Nigeria, Gabon sale

12 December 2017, Week 49, Issue 719

Sinopec has hired BNP Paribas to sell its Nigerian and Gabonese businesses acquired through its purchase of Addax Petroleum in 2009, three sources told Reuters last week. The Chinese company is expected to hold onto its Cameroonian interests, though. 

The decision was attributed to a number of factors, including low oil prices, militancy in Nigeria and a corruption inquiry into the actions of certain Addax executives. 

The news agency reported that the assets are expected to sell for around US$1 billion. Sinopec bought Addax for US$7.2 billion, paying a premium of 47% on the company’s then share price. Reuters suggested Perenco or Kosmos Energy might be interested in the assets.  


The news agency also noted the decision, in August this year, to close Addax’s three offices, in Geneva, Houston and Aberdeen. 

Points of strain

In July, the company agreed to pay 31 million Swiss francs (US$31.2 million) to settle a corruption probe from the Geneva prosecutor’s office. The company and two executives were suspected of bribing foreign officials, according to the Swiss probe. No criminal intent was admitted but the company acknowledged shortcomings. 

Company filings in the UK reveal Addax’s CEO, Yi Zhang, had been removed as a director, replaced by Guangjun Chen. A report in Switzerland’s Le Temps said the company’s legal director, Guus Klusener, had retired at the end of June.

While the payment ended the Swiss probe, the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC) were reported in late August to be examining potentially worrisome payments. There are allegations that payments were transmitted via banks in New York and California. 

The Le Temps newspaper published a report from Deloitte – Addax’s auditor – in November setting out a number of concerns. Deloitte expressed concerns about Addax’s failure to provide “sufficient audit evidence to support various payments made in relation to the Nigerian and Gabonese business units”. 

In particular, it noted payments of US$20 million made to “legal advisors” in Nigeria and the US and a payment of US$80 million paid to Kaztec Engineering. The latter payment, Deloitte said, “may have ultimately been utilised to bribe government officials”. 

Among a number of details, Addax is also said to have paid US$75,000 for a Chopard watch, intended as a gift to Nigeria’s then oil minister, Diezani Alison-Madueke. “Eventually the gift was not presented and the watch has allegedly disappeared, potentially misappropriated by Addax management.” 

Given the cloud hanging over Addax’s West African dealings, any buyer is likely to be extremely cautious – and to demand a low price. 

Addax’s primary driver has always been Nigeria, with production of 108,000 bpd in 2008 from a company total of 136,000 bpd. In the 12 months to June of this year, Addax’s output averaged 33,700 bpd, according to data from Nigerian National Petroleum Corp. (NNPC). 


Edited by

Ed Reed


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