China has been pursuing its investigations and research for using its surplus cash reserves to secure its long-term sources of oil and natural gas crucial for its future growth and progress. Its favorable balance of payments position over the years has led to an escalation in its foreign exchange reserves to such an extent that it is considering multiple acquisitions, which will reap returns and at the same time secure its requirement for various resources. Besides its direct investment in oil and gas fields in Africa, China is now looking at securing investments in other western companies that have exploration activities in African oil fields. China has started preliminary talks with Addax Petroleum, which is a Swiss oil and gas exploration company based in Geneva. The Chinese interest has been highlighted by the newspaper, the South China Morning Post, and the Swiss major has also hinted at the likelihood of a transaction in the near future. Speculation about a Chinese take over has sent the company’s shares spiraling upwards by as much as 11%.

Various Chinese companies pursuing investment opportunities include Sinopec, that is, China Petroleum & Chemical Corp., which is the frontrunner with a bid of $ 8 billion. The China National Petroleum Corp., and China National Offshore Oil Corp., are considering bids worth $4billion for Kosmos Energy, a US based company, though they have expressed interest in a stake in Addax Petroleum as well.

Both these companies, namely Addax Petroleum and Kosmos Energy, hold something of interest for China, that is, they both have oil exploration facilities in West Africa. Addax has operations in Nigeria, Gabon and Cameroon, while Kosmos Energy operates the Ghana oilfields. Ghana offers a secure investment climate as well.

The talks are at preliminary stages, and Chinese companies are not the only interested buyers. But with their money muscle and ability to make a cash down payment, they might just emerge victorious. These Chinese companies are either state owned or have the government’s backing, making it easier for them to make their offer more attractive.

China’s interest in Africa is one of the most talked about issues all over the world. China has been providing aid and support to almost all the African countries and has also been doing so with no strings attached all these years.

Source : China Africa