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.