SINGAPORE�Singapore Petroleum Co. (SPC) has agreed to acquire a 15% stake in the Kakap production-sharing contract in Indonesia's West Natuna Sea from Louisiana Land & Exploration Co. (LL&E). Under terms of the deal, SPC�owned jointly by Singapore's Keppel FELS Oil & Gas Services Pte. Ltd. and Japan's Itochu Petroleum Co.�will purchase LL&E Indonesia, which holds the Kakap PSC interest. The value of the deal was not disclosed.
LL&E Indonesia is a wholly owned subsidiary of LL&E, itself a subsidiary of Burlington Resources Inc., Houston.
The Kakap PSC is one of three PSCs in the West Natuna Sea that will supply natural gas to Singapore through a planned 640-km subsea pipeline. The three PSC groups have already entered into a gas supply agreement with Indonesian national oil company Pertamina. Pertamina in turn executed a gas sales agreement with Singapore's SembCorp Gas Pty. Ltd. in January of last year.
Kakap will contribute about 20% of the agreement's total gas sales volume of 2.5 tcf over 22 years. Development of the gas fields and construction of the pipeline and other infrastructure are under way. Delivery of gas is expected to begin early next year.
SPC, whose activities are now limited to refining and marketing, says the investment in Kakap will expand its scope and widen and diversify its assets and earnings base to make it more of an integrated oil company. SPC, BP Amoco PLC, and Caltex Corp. are partners in Singapore Refining Co., which operates a 285,000 b/d refinery on Pulau Merlimau. The refinery is operating at reduced throughput this year due to excess product supplies in the region (OGJ, Jan. 17, 2000, p. 28).
SPC and Keppel FELS chairman Choo Chiau Beng said the acquisition of the Kakap PSC stake will also give SPC a stake in the region's fast-growing gas market. The acquisition, which is expected to be concluded in mid-July, will be effective Jan. 1, 2000, and is expected to contribute to SPC's earnings in the current financial year.
