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August 19, 2009

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Sinopec wins Addax takeover

SINOPEC Group said yesterday it has completed its US$7.5 billion acquisition of Addax Petroleum, obtaining new reserves in Africa and the Middle East in China's biggest foreign corporate takeover to date.

China Petrochemical Corp, as Sinopec Group is known, bought Addax through its wholly-owned Sinopec International Petroleum Exploration and Production Corp. SIPC's bid for Addax is C$52.80 (US$46) per share.

After acquiring all Addax's common shares, Sinopec will also take over all convertible bonds and equity options held by Addax, after which the Geneva-based firm will become a wholly-owned subsidiary of Sinopec, said an insider with Sinopec.

In a statement, Sinopec said it would maintain the corporate management and all employees of Addax, and would only second a few of its managers and technicians.

"The goal is to make Addax a real international oil and gas exploration and development company in Sinopec group," said the company.

The structure of Addax's oil and gas assets are of good quality, the company's remaining recoverable reserves and production scale are large, and there is good potential for more oil and gas reserves and output, according to Sinopec.

The takeover of Addax, whose oil and gas reserves are similar to a mid-sized oil field in China, will accelerate Sinopec's international growth strategy and optimize its offshore oil and gas asset portfolio, said Zhang Kuikuan, general manager of Beijing Jcache Energy Information Services.

With its oil and gas assets concentrating in Nigeria, Gabon and Iraq, Addax has 25 oil and gas blocks. Its remaining recoverable, proved and probable reserves are 537 million barrels, and the average crude oil output is 143,000 barrels per day. The annual oil output is expected to rise from 7 million tons to 10 million tons.

The acquisition will be important for Sinopec's strategy to be a global oil and gas firm, said Xing Houyuan, an expert at the Chinese Academy of International Trade and Economic Cooperation, under the Ministry of Commerce.

After the acquisition of Addax, Sinopec will find a new position in the world's top 500 firms and among its international counterparts, she said.


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