CNOOC - China's dominant offshore oil producer - is to buy a 12.5 per cent stake in eastern Indonesia's Tangguh gas field, according to the field's largest investor, oil and gas giant BP.
The deal, expected to be announced by CNOOC today, will be larger in terms of gas reserves but smaller in dollar amount than its previous 5 per cent acquisition of a stake in Australia's North West Shelf gas field, sources said.
China National Offshore Oil - the parent of Hong Kong listed CNOOC - signed an agreement with investors in the Tangguh project yesterday to buy 2.6 million tonnes of liquified natural gas (LNG) annually for 25 years, BP said.
The LNG, costing an estimated US$500 million per year, will supply a planned receiving terminal in Fujian province which is expected to begin operations in 2007.
The Tangguh gas field is estimated to have 14.4 trillion cubic feet of gas - equivalent to 2.59 billion barrels of oil equivalent (boe). A 12.5 per cent stake is equivalent to 324 million boe.
Last month CNOOC bought 210 million boe of gas reserve in the North West Shelf for US$320 million, or US$1.52 per boe.
Analysts expected the per boe acquisition cost of CNOOC in Tangguh to be under US$1.