CPC agrees US$47 million deal

Taiwan's government-owned petroleum refining company, CPC, has agreed to pay US$47 million (Dh173m) for a stake in a Qatari gas liquefaction facility and has also signed an agreement for joint investment with Qatar in other energy projects. The deal will give CPC a five per cent interest in one of three gas liquefaction trains operated by the Rasgas II venture, which is 70 per cent owned by Qatar's national oil company, Qatar Petroleum, and 30 per cent by ExxonMobil, the US oil and gas major. It will also strengthen Qatar's position as a long-term supplier of liquefied natural gas (LNG) to the Far East. The transaction also marks the first sale of a direct interest in a Qatari LNG facility by an entity part-owned by a foreign investor. Previously, stakes in individual Qatari LNG trains, or production lines, had been sold exclusively by Qatar's two state-owned LNG companies, Rasgas and Qatargas. The acquisition gives the Taiwanese company its first stake in LNG production facilities. In proceeding with the deal, CPC is exercising an option it acquired three years ago when it finalised a contract with Rasgas II to buy three million tonnes annually of LNG for 25 years, starting this year. "The move is likely prompted by Taiwanese willingness to increase its energy security by cementing long-term relationships with producer countries," said Samuel Ciszuk, the Middle East energy analyst with Global Insight, a business intelligence firm. The deal "adds further indication" that Qatar may be favouring energy trade relationships with Asian markets, he added. Due to years of steadily increasing demand for gas to fuel power generation and industrial development in emerging Asian economies, combined with limited supply options, Asia Pacific customers have been willing to contract for long-term LNG imports at significantly higher prices than European customers in the Atlantic basin. The strengthened Qatari alliance with CPC could indicate that Qatar sees the Asia Pacific price premium for LNG persisting, Mr Ciszuk said. CPC is Taiwan's sole gas importer. The island nation's LNG imports were projected to reach 94 million tonnes this year, rising to 16 million tonnes annually by 2016, according to Reuters. The Rasgas II LNG trains each have a production capacity of 4.7 million tonnes annually. The most recently completed train, in which CPC is investing, came on stream in early 2006, and exports LNG to both Asia and Europe. Qatar, with the world's third-biggest gas reserves, is the leading global LNG exporter. The Gulf state plans to double its LNG production capacity to 77 million tonnes annually in 2010 from about 38 million this year.

tcarlisle@thenational.ae