Tue, Oct 17, 2006 - Page 11 News List

CPC in race for Libyan oil

DIVERSIFICATION PLAN Desiring to diminish its reliance on Middle East oil, Taipei shifted its focus to Africa, where it will contend with giants like China for precious crude

BLOOMBERG , TAIPEI

Taiwan's state oil company is on a short-list of bidders for fields in Libya, seeking supplies for Asia's sixth-largest economy in a contest that includes rivals from mainland China.

Chinese Petroleum Corp (CPC, 中國石油), based in Taipei, and China National Petroleum Corp (中國石油天然氣) and China Petrochemical Corp (中國石油化工), both based in Beijing, are among 47 applicants -- reduced from 70 -- for Libya's third round of bidding for drilling rights, according to an undated statement on National Oil Corp of Libya's Web site. Libya is offering 41 blocks in 14 areas.

"Libya is among our priorities," Lu Ming-tar (呂明達), head of exploration and production at CPC, said in an interview. President Chen Bao-lang (陳寶郎) will travel to Libya next month, he said, declining to give details. "After visits by high-level executives, hopefully it'll be faster."

Taiwan wants to break a reliance on shipments from the Middle East, the source of 80 percent of its oil, bidding for Libyan fields and holding energy talks with other African nations including Nigeria.

"Africa is one of the many battlegrounds" in Taiwan's fight for energy with China, said Yang Feng-shuo (楊豐碩), director of energy studies at the Taiwan Institute of Economic Research (台經院). "Africa is hot because people want to diversify oil sources."

Libya, holder of Africa's largest oil reserves, in August invited foreign oil companies to bid for drilling rights. Permits to search for oil and gas in 14 areas covering 99,437km2, nearly the size of the island of Cuba, will be auctioned on Dec. 20.

A stake in a Libyan field would be the Taiwanese refiner's second in Africa. In January, CPC and Chad's government signed a contract to explore for oil and gas in three areas, with the Taipei-based company paying US$17 million and earmarking another US$4.95 million in spending this year.

Outside of Africa, CPC has bought stakes in eight fields in Ecuador, Venezuela, Australia, Indonesia and the US to ease Taiwan's Middle Eastern dependence. That region accounted for four-fifths of last year's oil imports, chiefly from Saudi Arabia, Kuwait and Iran, according to the Energy Bureau under the Ministry of Economic Affairs.

"We have to diversify our oil sources," Lu said. "If we're getting it from one place, what are we going to do if they cut supplies?"

CPC is in talks with the Nigerian government over oil fields, Lu said on Oct. 4. The two parties signed an agreement for possible rights to explore for oil and gas, Chen said in August.

CPC may send officials to Angola next year to study possible purchases, Lu said. The African nation is Taiwan's fourth-biggest crude supplier and the largest on the continent.

In July, Lu visited Taiwan's diplomatic allies in Africa, including Gambia and Sao Tome and Principe, where the local authorities invited CPC to study offshore exploration, he said.

Taiwan's relatively weak diplomatic status and lower spending power relative to China is an obstacle to CPC's efforts to expand its exploration and production operations, Lu said. "Countries can always say: `If you don't give me this, I'll go to the mainland,'" he said.

China is providing Angola about US$5 billion in credit to help rebuild an economy ravaged by civil war. The Beijing government pledged US$2 billion to Nigeria for projects including an oil refinery.

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