brr now, page-17

Feels like some pegs dropping into place...

Sinopec put forward a signature bonus of $2.2B for 20% of blocks 17 and 18. This was also tied to the development of an oil refinery.

Very interesting indeed now that we know which blocks we are looking at!

No wonder it's $100M per block for a slice - even a very small one. $100M would buy under 2% of one of the blocks following what Sinopec has paid and it sounds like we may be looking at more - perhaps 5%. This is huge.

1 - 3 BILLION barrels of oil on one of the blocks!

************

Outlook and Implications

These huge bids from Sinopec should easily be enough to secure the rights to the relinquished areas of Blocks 17 and 18. The signature bonuses are incredible figures, but only follow the previous record-breaking bid by Eni for Block 15. China has the capital to make these deals, with its economy growing at 10% GDP, but the country also needs to lock up new sources of energy in order to feed its economic boom. This deal makes sense in this respect as it secures further supply. Angola has an extremely good relationship with the Chinese government in Beijing and is currently China's biggest supplier of crude oil. China has significant investments in Angola and the two countries have agreed to work together on the 200,000-b/d Lobito refinery in central Benguela province, which is set to come onstream in 2009 (see Angola: 21 March 2006: Sinopec Takes On Lobito Role in Angola with Prospect of Upstream Pay-Off). Angola has also managed to negotiate a US$3-billion oil-backed loan with China, which is being used to rebuild the country's infrastructure. China's continued financial assistance is preferred to the more stringent conditions that would be applied if Angola chose to accept money from international financial institutions. Angola's production capacity has increased to 1.4 million b/d and Amadeu Azevedo, Angola's National Director of Petroleum, has stated that Angola would be producing more than 2 million b/d by the end of 2007.Saturnino expects to announce the results of the bidding process on 8 June.

**************