Sinopec deal helps AED Oil recover

THE battered share price of AED Oil has managed a partial recovery after the Foreign Investment Review Board cleared the way for China's Sinopec to acquire a $600 million stake in the group's Timor Sea oilfields.

AED shares rose 17¢, or 7.7%, to $2.36, although approval from the Chinese Government and other authorities has not been received. Sinopec is to acquire a 60% interest in AED's Puffin oil project. Earlier enthusiasm for the project drove AED's share price to a record $11.40. But disappointing production results saw the stock sold off to a low of $1.01 ahead of the Sinopec deal.

The clearance follows suggestions last week that the FIRB was giving Chinese investors a hard time in response to China's $US15 billion ($A16 billion) share raid on Rio Tinto, and thoughts that its takeover suitor, BHP Billiton, could be next.

The Federal Government spent the weekend hosing down those suggestions, with Resources Minister Martin Ferguson saying that "there's no suggestion that China or any other investor should back off".

He was responding to reports that at least 10 Chinese groups had been told by the FIRB to withdraw their applications so they could be reviewed at a later date on grounds of "national interest".

It also emerged yesterday that if there are delays in China securing investment approvals, it is more a result of helpful procedural hints from the FIRB to deal with a backlog of applications rather than a national interest backlash.

That was the case with an application by Indonesia's Aneka Tambang and its Chinese partner, Zhongjin, in their friendly $2.50-a-share takeover bid for Perth-based Herald Resources.

The bidding partners said that since lodging their FIRB application on March 4, they were told that to avoid the FIRB formally extending its time for consideration of the application by 90 days (as the FIRB is able to do), the FIRB "suggested" the process would be expedited if the application was withdrawn and immediately resubmitted.

"This has the effect of starting afresh the time period for FIRB's consideration of the application, but avoids a 90-day extension," the bidding partners said.

And in a reversal of the seemingly one-way direction of resource investments, Oxiana has received the final approval needed for its $US310 million Martabe gold project in Indonesia to proceed. The final approval was the "construction permit" that is issued by the Department of Energy and Mineral Resources.

Oxiana said the permit approval met the original approvals timeline set out by Indonesia last year.