Caltex to invest US$5.0b in Asia by 2000: Chairman

Caltex to invest US$5.0b in Asia by 2000: Chairman

SINGAPORE (Reuter): Caltex Petroleum Corp, a joint-venture of U.S. oil majors Texaco Inc and Chevron Corp, plans to invest US$5.0 billion in Asia by 2000, chairman David Law-Smith said yesterday.

As part of the investment, Caltex has launched a $500-million program to strengthen its marketing position in the region involving redesigning the company logo and service stations, and building new ones, he said.

"We are in the process of completing our plans and making our priorities," Law-Smith told Reuters in an interview.

"But we are looking at a number of $5.0 billion. The area we are looking at is the whole of Asia, including new markets, that is China, Vietnam, Cambodia, India and Indonesia."

Law-Smith also said Caltex was revamping its Asia management, putting top decision-making executives into Singapore to bring management closer to the market.

He said Caltex interests in China involved areas under less government restriction, including liquefied petroleum gas (LPG), lubricants, the production of asphalt for road building and retail sales of transportation fuels, especially in southern China.

China has made known it does not need foreign investment and technology in developing oil refineries, he said. "However there is certainly room for integrated refineries and petrochemical plants down the road," he said.

"Another important issue is that should China's growth of eight percent be compounded, it will be very difficult for them to have the physical infrastructure in the refining and energy industries to support that kind of growth if indeed new refineries are not built."

Caltex plans in India were also focused on the LPG and lubricant sectors, Law-Smith said.

"Until the government changes the pricing structure in India, our feasibility study has indicated that refining is not an attractive investment," he said.

"But we don't exclude storage and importation of refined oils to the extent that the tremendous growth in India requires that. We would like to participate in that sector."

He said Caltex had started discussions with several parties in India on possible investments, had done its research and analysis, and was "half-way" to making decisions.

"It is now largely dependent on areas out of our control and that is the government's willingness and encouragement to make these investments," he said.

Law-Smith said Caltex had signaled to Jakarta government its intention and ability to enter Indonesia's downstream sector to help meet growing demand, especially for transportation fuel, as the economy grows.

Indonesia is keen to attract private and foreign oil companies to build export-oriented oil refineries. But Law-Smith said companies like Caltex were reluctant to build such refineries, in Indonesia or elsewhere.

"But there is, of course, a desire for those with the raw materials, that is the crude, to add value to their exports but that is unlikely to happen in the near future."

Caltex's sister company, Caltex Pacific Indonesia, which directly reports to Texaco and Chevron, is currently producing 760,000 barrels per day of crude in Indonesia.