PetroChina buys into Singapore refiner

China National Petroleum Corp. subsidiary PetroChina, taking a first-ever step away from its parent company, has agreed to pay $1.02 billion to Keppel Corp. for a minority stake in Singapore Petroleum Co.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, May 26 -- China National Petroleum Corp. subsidiary PetroChina, taking a first-ever step away from its parent company, has agreed to pay $1.02 billion to Keppel Corp. for a minority stake in Singapore Petroleum Co.

"SPC will become a new platform for the implementation of our international strategy and will provide a broader foundation and stable path for development," PetroChina said of the agreement signed by PetroChina International (Singapore) Pte. Ltd., and Keppel Oil & Gas Services Pte. Ltd.

PetroChina said it purchased 45.51% of the Singaporean company's issued share capital at a premium on the market price of 24%, adding that it also intended to make an offer for the remaining shares upon completion of the agreement.

The Chinese firm said that SPC is a regional energy company with interests in petroleum refining and marketing and that it owns a 50% stake in Singapore Refining Co., one of the island nation's three major refiners.

SPC also is engaged in oil and gas exploration, with production properties in China, Indonesia, Vietnam, Cambodia, and Australia.

The agreement marks a first for PetroChina, which has previously relied on support from CNPC for overseas agreements, with all business handled via a joint venture known as CNPC Exploration & Development Co.

As a result, the agreement between PetroChina and Keppel has excited comment among oil industry analysts.

"This should be a landmark as PetroChina is acquiring overseas stake directly (rather than via its state parent before), and we expect Sinopec Corp. to follow suit," China Merchants Securities analyst Qiu Xiaofeng told the Shanghai Daily.

Analyst Global Insight said, "The purchase through PetroChina…rather than through parent company CNPC could help emphasize the commercial nature of the transaction in order to deflect criticism that PetroChina is pursuing a nationalist grab for energy supplies."

Contact Eric Watkins at hippalus@yahoo.com.

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