Sinopec and Apache enter upstream oil and gas partnership

Sinopec International Petroleum Exploration and Production Corporation (“SIPC”), a fully-owned subsidiary of Sinopec Group, and Apache Corporation announced today they have launched a global strategic partnership to pursue joint upstream oil and gas projects. As the first step, Sinopec will pay $3.1 billion in cash, subject to customary closing adjustments, in exchange for one-third participation in Apache’s Egypt oil and gas business. The Egypt partnership is subject to customary regulatory approvals.

Apache Corporation is an US independent upstream oil and gas company, has operations located in Egypt’s West Desert. As estimated by Sinopec, the remaining 2P reserves of Apache’s Egypt operations by December 31, 2012 contained 641 million barrels of oil and 3.79 trillion cubic feet (tcf) of gas (equivalent to 632 million barrels of oil), with gross production averaged at 213,000 barrels of oil and 363,000 barrels of oil equivalent of oil and gas per day.

The partnership will contribute additional 130,000 barrels of oil equivalent per day (about 6.50 million of oil equivalent annually) of production to SIPC. Through this partnership, Sinopec is able to enter the upstream oil and gas sector of Egypt for the first time and expand its international upstream portfolio. By combining the complementary strengths of Sinopec and Apache, this alliance will create added value for Egyptian operations, bringing win-win results for both partners. In the meanwhile, this partnership will further build up Sinopec’s capability and experience in promoting overseas reserves and production.