BP Amoco-Arco to become Asia's top gas producer
BP Amoco-Arco to become Asia's top gas producer
SINGAPORE (Bloomberg): BP Amoco Plc's purchase of Atlantic
Richfield Co. will make the merged company Asia's No. 1 non-state
natural gas producer, giving it access to the world's fastest
growing natural gas markets in China and Japan.
London-based BP Amoco, the world's third largest publicly
traded oil company, said U.S. antitrust authorities yesterday
approved its US$33 billion buyout of Atlantic Richfield, known as
Arco.
"The merger will make us the largest in natural gas in Asia,
larger than Exxon and Shell," said Amir Hamzah, media and public
relations manager at Arco Indonesia. "This give us even more
resources to develop our natural gas business in Asia."
Arco has more than 14 trillion cubic feet of proven natural
gas reserves in Indonesia, worth more than $50 billion at current
prices. Japan, China and South Korea are turning to natural gas
for power generation as it burns cleaner than crude oil or coal.
Demand growth in Asia is estimated at about 6 percent a year.
"Our marketing efforts in countries like Japan and China will
be strengthened," said Amir. The merged BP Amoco-Arco will
control about 7 percent of proven natural gas reserves in
Southeast Asia.
"Everyone realizes natural gas is the fuel of the moment and
Asia is the highest growth region," said Peter Hitchens, an oil
analyst with brokerage Williams de Broe in London, which has a
"sell" recommendation on the company.
Indonesia's state-owned oil and gas company PT Pertamina and
Malaysia's state-owned oil company Petronas are the biggest
holders of natural gas reserves in Southeast Asia.
While BP Amoco had to sell Arco's prized stakes in Alaskan oil
fields to win over antitrust regulators, it appears to face few
obstacles in expanding control over Asia's natural gas market.
Arco in 1998 bought a 25 percent interest in the Malaysia-
Thailand Joint Development Area in the Gulf of Thailand. It
contains an estimated 5 trillion cubic feet of natural gas.
In China, the main asset BP Amoco will acquire is a more than
one-third stake in the Hainan natural gas field and related
pipeline, said Simon Lang, BP Amoco's China vice-president for
gas and power.
The field is China's largest offshore natural gas find with 3
trillion cubic feet of reserves.
Arco operates the field and pipeline together with state-run
China National Offshore Oil Corp., which has a 51 percent stake
in the project. Kuwait Foreign Petroleum Exploration Co. holds
the remaining 15 percent stake in the field.
Lang declined to provide any further comment on how the merger
would affect BP Amoco's China operations.
BP Amoco's acquisition of Arco could yield some benefits for
Zhenhai Refining and Chemical Co., company officials and analysts
said.
Arco owns about 9 percent of Zhenhai, which could rise to 20
percent if convertible bonds purchased in 1996 are exercised,
said Zhenhai's Secretary Su Dewen.
"To have a major global player like BP Amoco become a key
shareholder in our company is definitely a good thing, although
we will still have to take some time to study exactly what this
will mean for the company," Su said.
BP Amoco's stake in Zhenhai would pave the way for joint
ventures between the two, said Gordon Kwan, a petrochemical
analyst at HSBC Securities (Asia) Ltd.