Nippon Oil, Mitsubishi to Take Stakes in US Gulf Oil Field

LAGOS May 10, 2007 (Dow Jones Newswires)

Nippon Oil Corp. (5001.TO) and Mitsubishi Corp. (8058.TO) will jointly purchase rights to an oil and gas field in the Gulf Of Mexico for $1.2 billion, marking one of the largest investments of its kind in North America by Japanese firms, The Nikkei reported in its Friday morning edition.

Anadarko Petroleum Corp. (APC) of the U.S. holds a 65% interest in the K2 complex, consisting of seven zones, off the southern coast of Louisiana. Nippon Oil and Mitsubishi will each acquire a 11.6% stake from the major independent gas and oil producer as early as next month, with both paying slightly more than Y70 billion.

The seven sites produce 32,000 barrels of crude a day and natural gas equivalent to 6,000 barrels of crude. Additional development is expected to lift daily oil production by at least 10,000 barrels as early as next year. As a result, the two Japanese companies are projected to gain rights to a combined 11,000 barrels a day. They initially will sell the output in the U.S. to recoup investments, and may eventually send oil to Japan.

This represents the single largest development project for Nippon Oil in terms of investment, and second only to a Y200 billion stake in the Sakhalin development in Russia for Mitsubishi.

Sumitomo Corp. (8053.TO) spent about Y15 billion on oil and gas rights in the Gulf of Mexico in 2005, with Marubeni Corp. (8002.TO) investing some Y130 billion last year and Itochu Corp. (8001.TO) roughly Y25 billion in March.

Copyright (c) 2007 Dow Jones & Company, Inc.

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