CNOOC Ltd and LNG Japan have decided to exercise the pre-emptive rights to block Japanese Mitsui's attempt to buy stakes from Britain's BG Group in the US$3 billion Tanguh natural gas project in Indonesia.

By pre-empting Mitsui, CNOOC Ltd and LNG Japan are set to increase their holdings in the BP-led project, which will supply liquefied natural gas to East China's Fujian Province and Mexico for decades.

BG signed a deal with Mitsui last month to sell all its 50 per cent stake in the Muturi block, one of three in the Tangguh project, for US$236 million in cash. The stake represents 10.7 per cent of the Tangguh project.

The existing three partners in Mituri, CNOOC Ltd with 44 per cent, LNG Japan 5 per cent and BP 1 per cent, however, have the option to thwart the deal and buy the same slice from BG at the same price.

"We have been noticed that CNOOC and LNG Japan will use their pre-emptive rights. BP have decided to waiver the right," said BG spokeswoman Petrina Fahey.

She said the Chinese and Japanese companies are considering how to share the stakes BG offered.

CNOOC officials have yet made comments on the deal.

"It is a smart decision by CNOOC," said Gordon Kwan, an energy analyst with HSBC.

The company will not only benefit from the increase of upstream reserves, but from the growing gas demand in China and other markets, said Kwan.

"The price is attractive. And the investment is of no risk," Kwan added.

CNOOC was allowed to join the Tangguh project last year after it agreed to buy 2.6 million tons of LNG annually for 25 years for its Fujian LNG project. It now has a 12.5 per cent of Tangguh.

Construction on the US$3 billion Tangguh LNG plant is expected to start this year, and to start operation in 2007.

Close

Today's Top News		Top Business News
+Taiwan stops playing with fire ( 2004-01-07) +Task force to oversee political progress ( 2004-01-07) +Nation puts lid on cost of basic utilities ( 2004-01-07) +No symptoms from 2nd suspected case ( 2004-01-07) +Experts urge business income tax unification ( 2004-01-08)		+Revamping energy supply system ( 2004-01-08) +Pre-emptive rights to be used on Mitsui ( 2004-01-08) +China Green IPO gets positive response ( 2004-01-08) +Bank support scheme backed ( 2004-01-08) +COSCO to enhance Pacific line ( 2004-01-08)