Taiwan’s state-owned CPC Corporation is in advanced talks to secure a 20% stake in the China National Petroleum Corporation (CNPC)-controlled Block H in Chad.

Taiwan’s state-owned CPC Corporation is in advanced talks to secure a 20% stake in the China National Petroleum Corporation (CNPC)-controlled Block H in Chad.

However, sources said talks between CPC and CNPC have hit a snag after the Chadian government fined CNPC for damaging the environment, a move that could delay the transaction by months.

Moreover, sources indicated the two companies have not finalised the value of the deal due to the drastic decline in oil prices.

“Talks about Block H started when the price was above $100 per barrel,” said one asset watcher, adding that the current low oil prices could bring down the price of any farm-in transaction.

Initial negotiations between the two sides focused on an asset swap between CNPC’s Block H and CPC’s BCO III block in Chad.

However, because China CEFC Energy secured 35% working interests in all three blocks operated by CPC in Chad — BCO III, BCS II and BLT I — last month, CPC has scaled down its interest to landing a 20% stake in Block H, according to sources.

CPC’s international division, the Overseas Petroleum & Investment Corporation, retains a 35% operating stake in these three blocks, while the Chadian government owns the remaining 30% working interest.

CPC’s three blocks have proven reserves of 106 million barrels of oil, but could potentially hold as many as 3.3 billion barrels.

The acreage is forecast to produce about 2.2 million barrels in total in 2017, rising to more than 7.3 million barrels by 2025.

A CPC official told Upstream that the three blocks are subject to a phased development.

Sources in Chad, meanwhile, said CNPC is ready to pay part of a $400 million fine, imposed by the Chadian authorities after they accused the company of dumping oil, by surrendering a 10% stake in Block H to the government.

CNPC took over Block H from Swiss company Cliveden in 2003.

The block straddles seven basins — Lake Chad, Madiago, Bongor, Doba, Doseo, Salamat and Erdis. Sources said that until 2013, when the dispute over environmental damage arose, CNPC made several fresh discoveries in the block, including Baobab and Ronier-1 in the Bongor basin.

Another discovery well, Cassia N-1, was drilled in 2010 and flowed 7350 barrels per day of oil during tests.