OREANDA-NEWS. November 12, 2012. China Petrochemical Corp, the nation's biggest refiner, is considering an acquisition of French oil explorer Etablissements Maurel & Prom, three people with knowledge of the matter said.

China Petrochemical, also known as Sinopec Group, has held discussions with Maurel in the past year though hurdles to a deal remain, said two of the people, who asked not to be identified as the deliberations are private. A deal could value Maurel at more than USD 2 billion, the people said.

Chinese refiners are seeking assets overseas as domestic earnings are depressed by state-controlled prices for processed fuels. Buying Maurel would allow Sinopec Group to boost oil output in African countries including Gabon, while avoiding the regulatory hurdles that's held up Chinese deals in the US and Canada.

"It's in the right kind of price range of a couple of billion dollars, not too small with rich international assets, while not too big that it attracts a lot of attention," said Neil Beveridge, a Hong Kong-based energy analyst at Sanford C. Bernstein & Co. "Its oil and gas resources in Africa look attractive to Sinopec Group."

Maurel Chief Executive Officer EO Jean-Francois Henin said in August the company isn't big enough to remain independent and partnering with another company or being acquired would allow development of oil and natural-gas projects.

At 1.3 billion euros (USD1.7 billion) before yesterday, Maurel's market value is less than 50th of that of Sinopec Group's Hong Kong-listed unit.

Maurel shares had fallen 9 percent in the past year before yesterday, cutting the company's market value by over 500 million euros.

India Oil talks

The firm had been in acquisition talks with India Oil Corp "on and off" for years, though it failed to get a reasonable offer for the firm, said Henin, who owns 24 percent of Maurel.

China's state oil companies have spent over USD 100 billion acquiring assets over the past decade to supply the world's second-largest economy. Sinopec in January said it plans to produce 50 million metric tons of crude a year overseas by 2015, up from 22.9 million tons last year.

The company agreed in July to spend USD 1.5 billion for a 49 percent stake in Talisman Energy Inc's UK unit, gaining access to oil and natural-gas fields in the North Sea. The 2009 acquisition of Addax Petroleum Corp for USD 8.8 billion brought Sinopec operations in Gabon.

Maurel has been in Gabon since 2004, and the country has been a "major growth engine," its website said. The firm also has assets or operations in Congo, Tanzania and Mozambique.