PetroChina Pushes For Pricing Power

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On May 25 State controlled energy group PetroChina, the listed subsidiary of China National Petroleum Corporation (CNPC), confirmed that it had agreed to pay US$1bn for 45.5% stake of Singapore Petroleum Company (SPC). The move represents the first major Chinese offshore purchase of a downstream energy company on record, and will give PetroChina a key foothold in Asia's largest oil trading centre. PetroChina will buy the entire stake in SPC from Singaporean oil rig manufacturer Keppel Corporation, paying SGD6.25 per share, a 24% premium over SPC's May 22 close and a 120% premium over its six-month volume-weighted average price. It will then carry out a mandatory general offer for the remaining 54.5% of the Singapore-listed company as soon as the deal is granted Chinese regulatory approval (though with SPC shares still trading slightly below the offer price CFW would caution that this is not yet guaranteed). SPC has stakes in oil fields in Indonesia, Australia, Vietnam and Cambodia, owns undersea pipelines carrying gas from Indonesia to Singapore and along with US giant Chevron jointly owns Singapore Refining, one of the three biggest oil-processing plants in the city state.