Record Asia Oil Takeovers Match US Pace for First Time

From Bloomberg

By Rakteem Katakey

Woodside Petroleum Ltd. (WPL)’s purchase of a stake in Israel’s largest natural gas deposit takes Asia- Pacific oil and gas acquisitions to a record $99 billion this year, tying the U.S. for the first time.

Australia’s second-largest petroleum producer yesterday said it will pay partners including Noble Energy Inc. (NBL) an initial $696 million and as much as $2.3 billion for part of the Leviathan field. Deals by U.S. energy companies have fallen 35 percent to $98.7 billion in 2012, while Asia-Pacific purchases increased 3.8 percent, according to data compiled by Bloomberg.

The Leviathan deal underlines the growing appetite for oil and gas assets among Asia-Pacific companies after energy demand in the region grew at more than double the world average of 2.5 percent in 2011. China Petroleum & Chemical Corp. (600028), Cnooc Ltd. (883) and India’s Oil & Natural Gas Corp. (ONGC) have secured supplies abroad as new fields are found from North America to Africa.

“There are so many more options for Asian companies now with new discoveries around the world,” said Laban Yu, head of Asian oil and gas equity research at Jefferies Hong Kong Ltd. “The trend will be led by China, which has a large foreign- exchange reserve and is seeking hard assets.”

China’s energy use is projected to rise 16 percent to 124.2 quadrillion British thermal units by 2015 from 2011 levels, according to U.S. Energy Information Administration data. Consumption in India will gain 14 percent to 27.8 quadrillion Btu, while South Korea will increase 6.7 percent and Japan 4.7 percent, according to the data.

China’s foreign-exchange reserves were $3.29 trillion, the world’s biggest, as of September, according to data compiled by Bloomberg. Japan, with $1.2 trillion as of October, had the second-biggest holding.

Leviathan Stake

Woodside, operator of the Pluto liquefied natural gas project, will buy a 30 percent share in Leviathan, Israel’s largest natural gas field. Noble Energy, Delek Drilling LP (DEDRL), Avner Oil Exploration LLP and Ratio Oil Exploration (1992) LP are partners in the project, according to the statement yesterday.

A surge in oil and gas production from shale rocks in the U.S. and Canada is prompting operators to rope in partners to meet capital expenditure. Canada, home to the world’s third- biggest oil reserves, will require almost C$650 billion ($655 billion) of investments to develop the nation’s biggest resource projects over the next decade, according to Natural Resources Minister Joe Oliver.

Higher production in North America means large amounts of capital and operators have no option but to sell some of their assets,” said Sonia Song, a Hong Kong-based analyst at Nomura Holdings Inc. “Buyers from Asia are stepping in.”

Nexen, Progress

Beijing-based Cnooc offered about $15.1 billion in July for Canada’s Nexen Inc. in the biggest acquisition bid by a Chinese company. Petroliam Nasional Bhd., Malaysia’s state-run company, has offered $5.2 billion to take over Progress Energy Resources Corp., in a deal that Chief Executive Officer Shamsul Azhar Abbas said will help Canada find an alternative market for its oil and gas. Both proposals are awaiting approvals from Canada’s government.

Woodlands, Texas-based Anadarko Petroleum Corp. (APC) led a group that has made the biggest gas discovery in a decade in an area off the coast of Mozambique. The fields, estimated to hold as much as 60 trillion cubic feet of gas that can meet Asia’s needs for at least five years, sparked a bidding war this year between Shell and Thailand’s PTT Exploration & Production Pcl (PTTEP) for Anadarko’s partner Cove Energy Plc.

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