CNOOC ups stake in Tangguh LNG project

Chinese oil and gas company CNOOC Limited announced Monday that its wholly-owned subsidiary CNOOC Muturi Limited has signed a Sale and Purchase Agreement (SPA) with BG Group to acquire a 20.767% interest in the Muturi Production Sharing Contract (PSC) for US$98.1 million.

This purchase will increase CNOOC Limited's interest in the Muturi PSC from 44.0% to 64.767%, and its interest in the Tangguh LNG Project will increase from 12.5% to 16.96%.

The Company is acquiring this interest pursuant to the exercise of its pre-emption rights with respect to the previously announced sale of BG Group's 50% interest in the Muturi PSC to Mitsui Indonesia Gas B.V. The remainder of the interest will be acquired by Indonesia Natural Gas Resources Muturi Inc (INGRMI), a wholly owned subsidiary of LNG Japan Corporation, a joint venture between Nissho Iwai Corporation and Sumitomo Corporation, pursuant to the exercise of its pre-emption rights.

"With this transaction, we are pleased to further increase our stake in a world-class LNG project," said. Fu Chengyu, Chairman and Chief Executive Officer of the Company. "The Tangguh Project has made considerable progress since our initial investment a year ago, and this additional purchase confirms our confidence in the project's future."

"The Company continues to seize attractive acquisition opportunities to add value and diversify risks," added Mark Qiu, Chief Financial Officer of the Company.

The effective date of the transaction is 1st January 2003. Completion of the transaction is conditional on Indonesian government and partner approvals and is expected to be completed within the second quarter of 2004.

Merrill Lynch (Asia Pacific) Limited acted as financial advisor to the Company in connection with this transaction.(alex)