Fox Hu, Zijing Wu and Tara Patel Hong Kong and Paris

China Petroleum & Chemical, seeking to reverse a decline in oil reserves, is close to buying stakes in Nigerian onshore oil blocks from Total, for about $2.4 billion (R20.9bn), according to two people familiar with the matter.

Sinopec, as the state-backed refiner is known, had signed a preliminary deal to acquire the stakes, said one source, who asked not to be identified.

China’s state-backed energy companies are seeking new oil and gas reserves abroad to feed its economy, especially from regions like Africa where government scrutiny is lighter than in North America or Europe. Sinopec had also approached the French oil firm Etablissements Maurel et Prom, which operates in Gabon, about an acquisition, people familiar with the matter said this month.

“We like the potential upstream asset acquisition in Nigeria because it could help Sinopec replenish its dwindling oil reserves and improve the firm’s overall profit margin amid sustained high oil prices in the long term,” Mirae Asset Securities head of energy research Gordon Kwan said.

Total, Europe’s third-biggest oil company, is seeking to divest $15bn to $20bn of assets from 2012 to 2014 in order to raise cash for oil and gas projects. Chief executive Christophe de Margerie has said most of that would come from the exploration and production division.

A Total official in Paris declined to comment. A spokesman for Sinopec was not available for comment.

Nigeria was tied with Norway last year as Total’s biggest source of hydrocarbons, accounting for 287 000 barrels of oil equivalent a day, or about 12 percent of the total. The company plans to pump 3 million barrels a day of oil and gas in 2017. – Bloomberg