Energy

CNPC set to buy 35% stake in Shell's Syria unit

By Wan Zhihong (China Daily)
Updated: 2010-05-20 09:25

BEIJING - China National Petroleum Corp (CNPC) said on Wednesday it is acquiring a 35 percent stake in Royal Dutch Shell Plc's oil and gas unit in Syria, the latest move in its overseas expansion to meet rising domestic demand.

The oil and gas producer will buy stake in Shell's fully owned unit, the Syria Shell Petroleum Development (SSPD).

The Syrian unit has interests in three production licenses covering some 40 oilfields, in which Shell holds a stake of 31.25 percent, CNPC said in a statement.

As an equity holder, Shell received 23,000 barrels of oil equivalent per day in 2009, said the statement.

"The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria's upstream industry," said the statement.

Both CNPC and Shell did not disclose the worth of the deal. According to a report by Bloomberg, it could be around $1.5 billion.

Analysts said the move would further boost CNPC's portfolio in the Middle East, a strategically important area in the company's overseas business.

"There is no doubt that the Middle East countries, which have the largest oil reserves in the world, will play an increasingly important role in domestic oil companies' overseas development," said Dong Xiucheng, a professor at the China University of Petroleum.

He expects the cooperation with foreign energy giants to reduce risks in overseas deals.

CNPC has made overseas investments in oil and gas sectors in 29 countries by the end of 2009. The company's overseas projects and technology services business have extended to 39 countries by the end of last year, according to its 2009 corporate social responsibility report released on Tuesday.

It now has presence in eight Middle East countries - Iran, Iraq, Saudi Arabia, United Arab Emirates, Oman, Syria, Yemen and Qatar.

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CNPC's listed arm PetroChina on Sunday signed an agreement with Shell and Qatar Petroleum to explore natural gas in the Middle Eastern country. Under a 30-year exploration and production sharing agreement, the partners will jointly explore for natural gas in an area covering 8,089 square kilometers.

Shell will hold a 75 percent stake in the project and PetroChina the remaining 25 percent. Shell and PetroChina will produce natural gas under Qatar Petroleum's supervision, and the Qatari company will be the purchaser of any gas produced.

The Middle East countries are the largest source for China to import oil at present. The country is now importing large volumes of crude from countries like Saudi Arabia, Iran and Oman. It has also signed contracts with other countries in the region such as Qatar, United Arab Emirates and Yemen for long-term oil imports.

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