Sonangol Wants To Block Marathon's Stake Sale To China -Source
LONDON (Dow Jones)--Angola's state-owned Sonangol would like to block the sale to Chinese companies of a Marathon Oil Corp. (MRO) oil-field stake, a person familiar with the matter said Friday, as the Asian powerhouse faces reversals in its quest to tap Africa's resources.
"They made up their mind. The seller won't mind," the person said about Sonangol's intention to preempt the stake and block its sale to Chinese companies.
On July 17, Marathon Oil agreed to sell a 20% stake in Block 32 to China National Offshore Oil Corp. and Sinopec for $1.3 billion.
At the time, China was seen as ramping up its takeover of African fossil and mineral resources to satiate its resilient economy.
In June, Sinopec already had agreed to acquire oil explorer Addax Petroleum Corp. (ADXTF)for $7.2 billion, which has a significant presence in Nigeria.
But within weeks, the strategy has started to face its greatest test as some in the African countries complain they aren't gaining from the relationship.
The person said state-owned Sonangol decided to exercise its right of first refusal two weeks ago and the seller would still expect to be paid $1.3 billion.
"They have the necessary cash, much of it from Chinese banks" which have lent to Sonangol in exchange for oil, the person said.
The person added that Sonangol was free to use the money to exercise its preemption rights.
But no formal deal has been announced and the considerations could still fall through.
However, U.S. consultancy Eurasia Group said Friday there was still "the possibility that Chinese pressure and negotiations could still force the Angolan government to step back."
A spokesman for Marathon said it had already announced that "the concessionaire and the other Block 32 partners have rights of first refusal.
"We are working through this process," he said, adding that the company doesn't expect any material impact on the timing of the sale, which is due year-end 2009.
The possible refusal comes hard on the heels of Libya's refusal to approve the $462 million acquisition of Canada's Verenex Energy Inc. (VRNXF) by China National Petroleum Corp.
"The Chinese have money burning a hole in their pockets and there have been suggestions that various senior Chinese officials have been sacked for not making more rapid progress in acquiring international oil and gas assets, a U.K broker said in note Friday.
But people familiar with the situation in Luanda said the decision was tied to some disappointment over the relationship with China.
"There are problems with the quality of their road works and with the unions. They don't involve locals" and instead bring workers from China, the person said.
Eurasia Group said "there has been mounting frustration in Luanda over Chinese business practices." The consultancy said that included "oil-backed loans that have locked in lower-than-market prices and Sinopec's controversial decision to walk away from the Lobito refinery, a major priority of the (Angolan) administration."
-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@dowjones.com
Marathon to sell $1.3B Angolan field, but not to China
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