S'pore Petroleum To Explore Off China

Aug 7 2007 (TODAY)

Cnooc can take up to 51% stake if oil or gas is found

Singapore Petroleum Company (SPC), the only refiner traded on the
Singapore Exchange, will explore for oil and gas with China National
Offshore Oil Corporation (Cnooc) in its first venture off the Chinese
coast.

The company will operate and own Block 26/18 in the Pearl River Mouth
Basin in the South China Sea, while Cnooc's Hong Kong-listed unit, Cnooc
Limited, has the right to take a stake of as much as 51 per cent should a
discovery be made, the Chinese oil producer said yesterday.

SPC has increased regional exploration and production since 2000 to gain
from rising oil prices.

Benchmark crude prices in New York reached a record US$78.77 a barrel on
Aug 1, helped by rising demand in China, the world's fastest-growing major
economy.

"Gaining entry into China will allow SPC to tap its vast market and
further strengthen SPC's exploration and production portfolio," SPC chief
executive officer Koh Ban Heng said.

SPC shares fell in tandem with a broad market sell-off yesterday, but they
have gained 8.3 per cent in the past two months, reaching a record $6.85
on July 23.

The drilling permit will give SPC access to an area of about 4,961 sq km.
The company, 45-per-cent owned by Keppel Corporation, will conduct seismic
surveys and drill exploration wells in the area.

The investment will not have any "material" effect on earnings per share
this financial year, SPC said.

China, the world's biggest energy consumer after the United States, is
encouraging its oil companies to step up exploration domestically and
abroad to supply an economy that expanded 11.9 per cent in the second
quarter. Cnooc is the nation's biggest offshore oil producer.

"There's great interest in exploring the potential in offshore China, so
we could keep a continuous flow of new projects for the joint exploration
of oil and gas resources," said Cnooc vice-president Zhu Weilin.

China's oil use may rise 6.1 per cent next year, the International Energy
Agency said in a July forecast.

Goldman Sachs Group and Cazenove Asia rated SPC shares a "buy" in separate
reports on July 20.

SPC raised its stake in Australia's Cue Energy Resources to 6.75 per cent
from 5.4 per cent last week. The company is drilling for oil and gas in
Indonesia with Cue Energy. - Bloomberg