SPC to expand upstream oil, gas operations in Asia: Report

Singapore Petroleum Co. Ltd. (SPC) is targeting upstream investment in oil and gas fields, with an eye to becoming one of the "top 10 integrated oil and gas companies in Asia," chief executive Leon Codron quoted by Dow Jones as saying Tuesday.

By increasing its upstream investment and securing a presence in the emerging Asian gas grid, SPC will be able to mitigate its exposure to volatile refining margins, Codron said.

In 2000, SPC's 15% stake in the Kakap gas field in the West Natuna Sea contributed US$27.91 million in revenues, SPC said in its earnings report, released Tuesday. That helped offset losses suffered when crude and product prices plunged in December, it said.

Rather than taking on the risk involved in oil and gas exploration, SPC hopes to invest in a field "that is about to be monetized," Codron said. He pointed to the Kakap project as a model.

SPC acquired its interest in the Kakap field through its January 2000 purchase of LL&E Indonesia Ltd., a unit of U.S. based Burlington Inc. (BR). First gas from the West Natuna Sea, including Kakap gas, arrived in Singapore Jan. 3, 2001.

Upstream gas and pipeline investment will allow SPC to supply gas to power generation assets held by sister company Keppel Fels Energy Pte. Ltd. (P.KEI).

Keppel Fels Energy will build a 470-megawatt cogeneration plant near Singapore Refining Co.'s Pulau Merlimau refinery, located on Jurong Island. That plant represents a US$200 million to US$300 million investment, according to Ong Tiong Guan, executive director of Keppel Fels Energy.

As Singapore restructures its power market, Keppel Fels Energy is also considering a stake in power generation assets to be divested by Singapore Power, Ong said. The company already holds a license to sell electricity in the deregulated market.

However, SPC wouldn't be limited to selling gas to Keppel Fels' plants, Codron said. He added that SPC would also consider supplying gas to power plants outside Singapore. (*)