Sinopec pays $2bn for Syrian Investment

Sinopec, China's state-owned oil company has agreed to buy Tanganyika Oil Company for a total amount of $2bn.

The deal is the largest known business transaction ever to involve a company whose whole activity and assets are located in Syria.

TOC, a Canada-based independent oil firm, signed in 2003 a redevelopment license on fields owned by the Syrian Petroleum Company in the northeast of Syria that contain in excess of 185 million barrels of oil in reserves.

The company's share stands at 67 million barrels. These fields represent the only assets and the only area of activity of the company.

The announcement of the deal, which was made by TOC on Thursday 25 September, follows several months of rumours over a potential takeover. The Board of TOC said that it approved Sinopec's offer of CAD 31.50 per share for its 65 million shares. TOC's shares traded as low as CAD 14.00 at the beginning of September.

Only a few days before the announcement, TOC issued a statement saying that it was in talks for a potential takeover with a "third party".

This unnamed investor was believed to be Oil and Natural Gas Corporation (ONGC) of India following an article in that sense published last week by The Mint, a business daily from New Delhi.

TOC operates in Syria through its fully-owned subsidiary, Dublin International Petroleum Syria.

TOC saw a sharp increase in its output rates in the last year. In August, output from the fields operated by the company rose to 21,700 bpd from 15,035 bpd on average in the first half of this year. The company's net share stood at 9,000 bpd, from 5,082 bpd in H1, 2008.

Syria has been able to attract a large number of small independent oil companies in the last few years but none of the major western firms. Meanwhile, Chinese firms have been hunting for a new oil reserves in order to feed their country's growing energy needs.

Sinopec's investment is the first involvement of the Chinese firm in Syria, although China National petroleum Company, the other large state-owned Chinese firm, is already present in Syria through a stake in AFPC and a joint-venture with SPC in the Kebibe block, which also contains heavy oil fields located in the northeast of the country.