PetroChina, the nation's largest oil producer, have made a major move into Indonesia's oil business after it yesterday agreed to pay US$82 million for half the stakes of the US-based Amerada Hess Indonesia Holdings Co.
Malaysia's Petronas took the other half on the same terms, PetroChina announced in a statement.
Amerada Hess has a 30 percent stake in the Jabung block on the island of Sumatra, which has proven reserves of 267 million barrels of oil equivalent (BOE) in six oil and gas fields. More than 70 percent of those reserves are as yet undeveloped.
The Chinese and Malaysian firms already each hold 30 percent stakes in the block, while Indonesia's state oil company Pertamina owns the remaining 10 percent.
PetroChina, the operator of the block, yesterday said the current three shareholders are in talks to allow Pertamina to increase its interest accordingly in the Jabung block.
Production of the block reached 8.47 million barrels last year, and is expected to triple by 2005.
Yesterday's deal is in line with PetroChina's strategy to buy foreign oil and gas reserves to fuel growth to offset any future decrease in its domestic production.
The statement said: "PetroChina believes that increasing its interest in the Jabung PSC is consistent with its policy to prudently expand its overseas business."
With the acquisition, PetroChina has strengthened its foothold in Indonesia. Last April, it paid more than US$200 million for stakes in six Indonesian oil fields from Oklahoma-based Devon Energy.
Indonesia, one of the largest Asian oil producers, has become a focus of China's diversification away from its heavy reliance on Middle East oil. PetroChina's rival CNOOC, the third largest oil company in China, has paid nearly US$900 million to acquire oil and gas fields since last year.
Sources said about 40 percent of the total reserves in the Jabung block are natural gas. The gas is contracted to pipe to Singapore under a 20-year deal starting this October.
The statement said yesterday's deal also includes the acquisition of Amerada Hess' 20 percent interest in development of facilities for the processing and marketing of liquefied petroleum gas and light naphtha.
(China Daily April 25, 2003)