Algeria Will Block $8.8 Billion Sale of Anadarko's Assets to Total SA

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The proposed $8.8 billion sale of Anadarko Petroleum Corporation's (NYSE:APC) (The Woodlands, Texas) oil and gas assets in Algeria, Ghana, Mozambique and South Africa is under threat after Algeria's government said it will block the sale to French company Total SA (NYSE:TOT) (Paris, France).

Occidental Petroleum (NYSE:OXY) (Houston, Texas) has a binding agreement with Total SA as part of its $38 billion takeover of Anadarko Petroleum. However, Algeria's Energy Minister Mohamed Arkab told Reuters that it will not allow the sale to Total: "Our ministry has contacted Anadarko to get explanations on this information, but so far we got no answer," he said. "It means there is no contract between Total and Anadarko...we have good relations with Anadarko and we will do the utmost to preserve Algeria's interests, including using our pre-emption right to block the sale."

Anadarko is the largest foreign oil producer in Algeria, and its partnership with state-owned Sonatrach is currently producing oil from three large projects in the Sahara desert--Ourhoud, HBNS and El Merk. Production stands at approximately 260,000 barrels of oil equivalent per day (boe/d), about a quarter of Algeria's annual output of 1 million boe/d. Arkab has since a told reporters that Sonatrach may need to be compensated for the deal to go ahead. Occidental and Total have not commented on the issue.

Speaking about the sale to Total, Occidental said the sale price will help cover the takeover costs of Anadarko and "reduce the overall integration demands of the acquisition." "We are pleased to have secured this agreement with Total," said Occidental President and Chief Executive Officer Vicki Hollub. "The $8.8 billion value to be received for Africa represents an attractive value based on our extensive evaluation over the last 18 months. Given our long history of working together productively, I am confident we can execute this sale quickly and efficiently. Total has extensive experience working in Africa and is well positioned to maximize value from these assets."

Patrick Pouyanné, Chairman and Chief Executive Officer of Total, added: "These are world class assets with great upside, and we welcome the opportunity to leverage our expertise in LNG and deepwater developments as well as our long history of operating in Africa."

Total's exploration and production activities in Algeria date back to 1952, and in 2017 its production averaged 15,000 boe/d, all of it from the TFT gas and condensate field, in which it holds a 35% interest. In 2017, Total signed a new concession contract for a period of 25 years with state-owned Sonatrach to extend the exploitation of the field, giving Total a 26.4% interest alongside Sonatrach (51%) and Repsol (22.6%). They have also agreed to a joint venture known as STEP (Sonatrach Total Entreprise Polymères) to build a petrochemical project in Arzew, western Algeria. The project includes a propane dehydrogenation (PDH) unit and a polypropylene production unit with an output capacity of 550,000 tons per year. Industrial Info is tracking the proposed $1.5 billion project which is due to be commissioned at the end of 2023.

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