Abu Dhabi Spanish oil unit Cepsa acquires stake in Liberian exploration block

Compania Espanola de Petroleos (Cepsa), the Spanish oil company owned by Abu Dhabi's International Petroleum Investment Company (Ipic), said it had acquired a 30 per cent stake in an exploration block off the Liberian coast in a so-called farm out agreement.

The move into West Africa comes as part of the Madrid-based company’s expansion into emerging markets.

The block, LB-10, is operated by Anadarko Liberia Block 10, a wholly owned subsidiary of Anadarko Petroleum Corporation headquartered in Texas, Cepsa said.

Cepsa did not say how much it intends to spend on the stake.

Under the farm out agreement, an oil and gas company will typically bring on board a third party to share expenses of exploration and drilling in return for a cut of the final profits.

In this agreement, Cepsa will participate in the drilling of two exploratory wells before August 2016, it said. The block is in a deep water area, with depths of between 1,000 and 2,000 metres.

Cepsa and Anadarko, which has extensive experience as an operator in this basin, are joined in the block by London-based Liberia Japan Petroleum and Repsol of Spain.

Cepsa’s chief executive Pedro Miro said in November that the company plans to spend US$10 billion in the next five years to expand its exploration and petrochemical businesses in North Africa, South America and South East Asia.

In the same month, Cepsa and partner Strategic Resources bought Coastal Energy for $2.2bn. Its biggest acquisition since 1999, Coastal Energy gives Cepsa a portfolio of oil and gas assets in South East Asia.

Cepsa’s largest production facilities are in Algeria and it would like to invest a further $1bn in that country, where it boasts a long-standing relationship with the government, Mr Miro said last year.

Cepsa’s offshore portfolio includes two exploratory blocks in Brazil and one in Suriname as well as exploration and production blocks in Thailand and Malaysia.

Ipic, formed by the Abu Dhabi Government in 1984 to invest in energy around the world, made a 10 per cent investment in Cepsa in 1988 and increased its stake to 47 per cent in 2009. It became the sole shareholder in 2011 after buying the stake held by France’s Total for $5.4bn.

Abu Dhabi, which holds about 6 per cent of the world’s oil reserves, has been buying global energy assets to diversify its stores of wealth and to buy companies that can enhance exploration and production at home through advanced technologies.

Cepsa, which also works in Brazil, Canada, Panama and Peru, has said that it is also keen to grow in the field of petrochemicals, where demand from Asia is expected to accelerate. It is building a plant in Shanghai to produce phenol, a petrochemical used in the production of detergents and pharmaceuticals.

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