Shell, Arco boost presence in SE Asia

Shell, Arco boost presence in SE Asia

SINGAPORE (Dow Jones): Royal Dutch/Shell Group (RD) and
Atlantic Richfield Co. are boosting their presence in
Southeast Asia's natural gas sector, despite the regional
economic downturn that's halted many gas infrastructure projects
in their tracks.

Shell announced last week it's agreed to an international
asset swap with Occidental Petroleum Corp. (OXY), under which it
will acquire the latter's holdings in Malaysia and the
Philippines. Shell expects to conclude the swap within 42 days.

In Malaysia, the deal will make Shell partial owner and
operator of a gas-rich block off the coast of the eastern
Malaysian state of Sarawak, while raising its stake in Malaysia's
third liquefied natural gas train, due to begin operation in
2001. In the Philippines, Shell will become the sole developer
the Camago and Malampaya natural gas fields, taking over
Occidental's 50 percent stake in the $2 billion project.

Earlier this month, Los Angeles-based Arco bought half of
Triton Energy Corp.'s (OIL) gas reserves in Block A-18 in the
Malaysia-Thailand joint development area, paying $150 million up
front and committing to $377 million-$507 million for initial
development of the block.

And in May, amid mounting economic woes and social unrest in
Indonesia, Arco indicated it's raising its exposure in the
country with the purchase of Union Texas Petroleum Holdings Inc.
(UTH). Union Texas has more than a third of its assets in
Indonesia's petroleum sector, primarily in liquefied natural gas.

Meanwhile, Arco's $3.3 billion acquisition of Union Texas
reflected a premium of nearly 40 percent to the latter's share
price at the time, valuing the company's Indonesian assets at
more than $1 billion despite the turmoil in that country.

With the purchase, Arco gains a 37.81 percent stake in the
Virginia Indonesia Co., or Vico. Vico supplies gas from the Sanga
Sanga block offshore East Kalimantan to Indonesia's Bontang LNG
plant, which it helps run.

The purchase was seen by industry observers as an effort by
Arco to acquire LNG credentials before proceeding with marketing
and development of its huge Tangguh natural gas discovery off
Irian Jaya.

The discovery is estimated to hold 10 trillion-13 trillion
cubic feet of gas. But industry observers say that - even more
than for Malaysia's LNG Tiga project - finding contract buyers is
crucial to Tangguh's development.