BP leads energy firms borrowing

BP leads energy firms borrowing

Denise Kee and Patricia Kuo, Bloomberg/Singapore

BP Plc., the world's second-largest publicly traded oil company,
led international oil companies this year in seeking loans to
expand in Asia as the region's economic growth drives demand for
raw materials and fuel.

BP, with Hong Kong-based oil producer Cnooc Ltd., this week
hired banks to arrange $1.3 billion for a project to supply
liquefied natural gas to China. It also got US$101 million for a
petrochemical plant in China. The deals make BP the biggest non-
Asian energy-related borrower in the region, Bloomberg data show.

Economic growth rates in China and India are the fastest among
the world's major economies and are spurring demand for funds
from companies to expand.

China, the largest energy user after the U.S., has had to
increase oil imports to meet demand expected to grow by 7.6
percent next year, more than three times the global rate,
according to the International Energy Agency.

"For multinational energy companies like BP, Shell and Exxon
Mobil, Asia should represent one of the fastest-growing markets
in terms of demand for both upstream and downstream business,"
Robert Scholten, head of loan syndication in Asia at ING Groep NV
in Hong Kong.

Energy and petrochemical firms in Asia got $11.9 billion of
loans this year to expand, almost double the amount in 2004,
Bloomberg data show. The biggest borrowers are China National
Petroluem and China Petroleum and Chemical Corp., or Sinopec,
which have raised a total of $6.45 billion from loans.

BP has more than $3.5 billion invested in China, said Michael
Zhao, BP's Beijing-based director of corporate communications. We
"plan to expand with about $400 million to $500 million of new
investment in each of the next three to five years," Zhao said in
an interview.

BP and Cnooc, China's largest offshore gas and oil producer,
are seeking the $1.3 billion loan as part of $3.5 billion of
financing to develop their Tangguh LNG project in Indonesia. BP
is the biggest investor, with a stake of 37 percent. Cnooc is the
second-largest, with 17 percent.

China's LNG imports will grow from zero to 18.3 million tons
over the next decade, according to a report by the Australian
Bureau of Agricultural and Resource Economics published in June.
LNG imports in the Asia Pacific region are projected to nearly
double in the next 10 years 124 million metric tons.

LNG is natural gas that has been chilled into liquid form so
that it can be transported on a ship. Buyers turn LNG back into
gas so it can be piped to power plants and households.

The Tangguh project will produce 7.6 million tons of liquefied
natural gas a year. The $6.5 billion development includes gas
production facilities and infrastructure such as a seaport and
airfield.

"Gas and oil will go where the next buyer is and a great
proportion of growth will come from the Asia Pacific region
because they are the growth markets," Jon Rigby, an oil and gas
analyst at UBS AG in London.

"Asia-Pacific is important to BP, particularly India and
China, mainly for gas and petrochemicals."

BP also got a $101 million 10-year loan for its BP YPC Acetyls
Co. (Nanjing) Ltd. petrochemical plant in China. BP owns half the
business with China Petroleum & Chemical Corp.

The venture, which is expected to start production in the
second half of 2007, will be able to make 500,000 metric tons of
acetic acid a year, Yangzi Petrochemical said March 22.

Acetic acid is used as a solvent and in the manufacture of
rubber, plastics, acetate fibers, pharmaceuticals and
photographic chemicals.