China coming to financial markets
In October of last year Chinese state-owned China National Offshore Oil (CNOOC) announced it would go public in a $1 billion initial public offering (IPO) on the Hong Kong and New York stock exchanges. The company subsequently retracted the bid, reportedly due to adverse market conditions.
While CNOOC has yet to announce the re-offering, the idea spread like wildfire through other state-owned oil companies in the country. Two other Chinese-government firms, Petro China, a unit of China National Petroleum Corporation, and Sinopec, a refining company, are also in the process of preparing for IPO.
The heavyweight of the two will be the offering of PetroChina. The company will represent China's largest-ever stock offering. It hopes to raise upwards of $5 billion in two listings in New York and Hong Kong. The government has been marketing the company for the past few months via roadshows in Singapore, New York, London, and Hong Kong. The listing is expected to open early this month.
The company will use funds from the offering towards capital spending and investments, reducing short-term and long-term borrowings, and general corporate purposes.
Analysts predict that the deal will be well received because it offers great potential to investors by allowing foreign entry into one of China's most guarded markets and with its strong potential. The company holds 13 producing fields, produces 67% of the country's total production, and has a refining capacity of over 44% of the country's total.
In the meantime, CNOOC is watching the deal and the market response closely, as this offering will prove a strong indicator for their later offering. Since the retraction, the company is trying to reshape itself to make it more attractive.
In order to do this the company is trying to shed its image of a state-run corporation which is at risk to changing politics, and provoke an image more on par with listed foreign firms. This has included a cost-cutting campaign and a focus on boosting earnings. A spokesman for the company was reported as saying, "We are not below other listed exploration and production companies. Whether in terms of profit or cost, we are in the top league."
No mention has been made thus far as to when the listing will take place. CNOOC has only said that it will occur when they think market conditions are "appropriate and mature" - in other words, after they see how the market reacts to PetroChina.
Timor Gap treaty paves way for Bayu-Undan approval
Australia and East Timor have signed a new Timor Gap treaty covering all oil and gas activities in the Cooperation Area shared between the two countries and paving the way for development of some of the areas key oil and gas plays. Representatives from both governments signed a memorandum of understanding agreeing to continue the terms of the original Treaty signed with Indonesia in 1989.
According to the United Nations, when Indonesia handed East Timor over to the United Nations on October 25, 1999, the Timor Gap Treaty between Australia and Indonesia became null and void. Hence, the treaty and all profits generated from the area will be backdated to that date.
In addition, the Federal Government of Australia has posed a bill to its Parliament mandating a change to the Timor Gap Treaty to exclude all reference to Indonesia.
Following this historic signing, the Joint Authority for the Timor Gap Zone of Cooperation (the governing body of the area) approved the development plan for the Phillips Petroleum-led Bayu-Undan gas recycle project. Bayu-Undan is located in production sharing contract areas 91-12 and 91-13 in Area A of the Zone of Cooperation.
The gas recycle project was approved by the partners in the project late last year. It involves the production and processing of wet gas; separation and storage of condensate, propane, and butane; and the reinjection of dry natural gas back into the reservoir. Total cost of the project is $1.4 billion and first production of liquids is expected in late 2003, with full commercial production early the following year. Initial production is expected to be 113,000 b/d (70,000 b/d of condensate and 43,000 b/d of liquid petroleum gas).
Phillips said that the approval "confirms the commercial success of a major new gas province in the central Timor Sea." Partners in the project include: Phillips (operator - 50.3%), Santos (11.8%), Inpex (11.7%), Kerr-McGee (11.2%), Petroz (8.3%), and British-Borneo (6.7%). They have since awarded a $28 million marine operations contract for the project to a 50/50 joint venture between Aker Marine Contractors and Clough Engineering. The companies will be responsible for the engineering, management, and the marine operations for transporting the two platform decks for the Central Production Processing Complex out to the field and installing them atop the pre-installed steel jacket substructures.
The companies will contract Offshore Heavy Transport Management for the transport and installation of the platform decks using a new heavy lift vessel. Installation will be achieved using the floatover method, in which the platforms will be floated down onto the substructures.
Lundin signs gas sales agreement
Lundin Oil has signed a gas sales agreement with Petronas, the state oil company of Malaysia, and PetroVietnam, the state oil company of Vietnam. The new agreement allots 250 MMcf/d of gas to be sold from the PM-3 Commercial Arrangement Area between the two countries for a period of up to 20 years.
The two state oil firms approved the field development plan for Phases 2 and 3 of the PM-3 project which provides for first gas delivery in the second half of 2003 and initial liquids production of 40,000 b/d.
Lundin operates the block with a 41.44% working interest held through Lundin Malaysia Limited (26.44%) and Lundin Malaysia AB (15%). Petronas holds a 46.06% interest while PetroVietnam holds the remaining 12.5%.
Woodside un-shelves trunkline expansion
Now that things have begun picking up, Australia's Woodside is taking another look at projects it was forced to shelve during leaner times. One of these projects that have been brought back to the planning stage is the expansion of its Northwest Shelf Trunkline.
The project will double the trunkline capacity of the main pipeline carrying production from the company's offshore fields to its onshore facilities by building a second line. The new project specifies a 40-in., 135-km subsea line linking the Goodwyn and North Rankin A platforms with the onshore gas plant on the Burrup Peninsula. The line will be identical to the one currently in operation.