China National Petroleum Corporation

CNPC to buy 70pc of oil and gas firm in Indonesia

PUBLISHED : Wednesday, 12 July, 2006, 12:00am
UPDATED : Wednesday, 12 July, 2006, 12:00am

CNPC (Hong Kong) has signed a letter of intent to buy a 70 per cent stake in an oil and gas firm operating in Indonesia, and provide US$60 million of loans to fund its exploration and development expenditure.

The deal may further diversify the company's mixture of projects that spans from Xinjiang Autonomous Region and Liaoning province on the mainland, to Azerbaijan, Myanmar, Oman, Peru and Thailand.

CNPC (Hong Kong), a local investment arm of China's largest oil and gas producer, China National Petroleum Corp, will pay $5.03 million to San Francisco-based GeoPetro Resources and Dallas-based Continental Energy for the stake in Continental-GeoPetro (Bengara-II), the company said.

China National Petroleum is the parent of PetroChina.

Sellers of the stake Continental Energy and GeoPetro Resources, will retain a combined 30 per cent holding.

Continental-GeoPetro has the right to explore oil and gas in the Bengara-II area, where it has had a 30-year agreement since 1997 to share output with Indonesian state oil company Pertamina after certain exploration and development expenses are covered.

CNPC (Hong Kong) will issue two separate loans totalling US$60 million to Continental-GeoPetro to fund exploration, drilling and development work.

CNPC (Hong Kong) will conduct due diligence on the project and negotiate with the sellers on a final agreement on joint operation. It expects to seal the deal by the end of this month.

The firm booked net profit of $3.64 billion last year, up from $768.03 million.

Cash in hand was $1.83 billion at the end of the year.

CNPC (Hong Kong) shares yesterday declined 1.07 per cent to close at $4.625.