CEFC China Energy has entered into a deal to purchase a 35% interest in oil blocks in Chad from Chinese Petroleum Corp (CPC) for the sum of $110 million.

According to CEFC company executives, the agreement symbolizes the company’s first concluded transaction in the upstream oil exploration and production as it focuses on establish a vertically combined energy business which will also include oil refining and fuel retailing.The three oil blocks in Chad; BCO III, BCS II and BLT I, are expected to commence production by the end of 2017 or early 2018, with first output at 6,000 barrels per day (bpd), and the potential to increase to 20,000 bpd in 2019.

“These are types of assets that large oil firms tend to overlook. But for us, it's a small but very good start, with attractive returns,” a CEPC official said.

However, the company spokesperson noted that the agreement was entered into on September 2, 2016 in Shanghai between CPC and CEFC’s subsidiary CEFC Hainan Intl Co. Ltd, Energy-pedia reports.Following the completion of the transaction, CPC now owns 35% and China CEFC Energy has added a further 35% of the exploration rights to the project, while Chad still holds on to the remaining 30%.

CPC began to seek out oil exploration deals in Chad in 2003. Taiwan and Chad signed an initial agreement on cooperation in oil exploration in 2004 and in 2006, CPC signed formal oil fields and joint operations contracts with Chad to obtain rights to prospect for crude oil in the Central African inland country.

Anita Fatunji