CNOOC buys stake in Tangguh LNG project

CNOOC buys stake in Tangguh LNG project

Dow Jones, Hong Kong

China's largest offshore oil and gas producer, CNOOC Ltd., said Tuesday it has completed the acquisition of a 12.5 percent stake in the reserves related to Indonesia's Tangguh liquefied natural gas (LNG) project.

CNOOC said in September it would pay US$275 million to buy a 12.5 percent stake in the project from BP PLC.

The Tangguh LNG Project comprises three production sharing contract (PSC) areas: the Berau, Muturi and Wiriagar PSCs.

CNOOC said it bought the 12.5 percent stake through the acquisition of a 44 percent interest in the Muturi PSC and a 42.4 percent stake in the Wiriagar PSC.

"With this transaction, we have taken a significant step in executing our natural gas strategy in China's rapidly growing coastal gas market," Yang Hua, senior vice president at CNOOC, said in a press release.

CNOOC Ltd.'s state-owned parent, China National Offshore Oil Corp., signed a $8.5 billion agreement in September with a consortium comprising BP and Indonesia's state-owned oil and gas company Pertamina, to buy natural gas over 25 years from the Tangguh gas field.

Partners in the Tangguh joint venture have signed a 25-year supply contract to provide up to 2.6 million metric tons of LNG a year to China's Fujian LNG terminal project.

Merrill Lynch (Asia Pacific) Ltd. and Credit Suisse First Boston (Hong Kong) Ltd. acted as financial advisers to CNOOC on the project stake acquisition.