China Signs New Oil Deal
BEIJING Jul 06, 2007 (From the Wall Street Journal via Dow Jones Newswires)
China's biggest state oil company has deepened its involvement in Sudan by signing a deal to help develop offshore oil, despite international efforts to isolate the African nation because of the humanitarian crisis in its Darfur region.
China National Petroleum Corp. and Indonesia's state-run oil and gas company, PT Pertamina, will explore Sudan's offshore oil block 13, a Pertamina executive said earlier this week, confirming an earlier report in the China Petroleum Daily. The Chinese newspaper, published by China National Petroleum, said the companies signed a 20-year concession agreement last month with Sudan's government that includes sharing future oil production from the offshore block.
China's already extensive involvement with Sudan's oil industry has come under heavy criticism from human-rights activists and others who say it helps a government complicit in ethnic killings in Darfur. The Chinese government has resisted efforts to impose international sanctions on Sudan's government. China National Petroleum, the country's largest oil company, is the parent of PetroChina Co., which is listed in Hong Kong and has American depositary shares on the New York Stock Exchange.
Some activists have targeted Beijing's 2008 Summer Olympics as a way to ramp up pressure on Beijing to change its policy on Sudan. China has responded by appointing a high-level diplomatic envoy and trying to nudge the Sudanese government to accept more international intervention in the crisis, but some say that isn't enough.
Pertamina Vice President Iin Arifin Takhyan said the Indonesian company has a 15% interest in block 13, and is cooperating with China National Petroleum and three other partners. The group will invest about $25 million during the first three years of exploration. A spokesman for China National Petroleum couldn't be reached for comment.
China National Petroleum and Pertamina signed the deal with Sudan's government on June 26 in Khartoum, the Sudanese capital, the China Petroleum Daily said Monday. The exploration phase will last six years, the report said, without specifying when it would begin.
Sudan is among Beijing's major oil suppliers. In the first five months of this year, it sent China crude cargoes totaling 4.7 million metric tons, a fivefold increase over the same period of 2006. Much of this comes from fields being developed by China National Petroleum.
Deeper involvement by the Chinese oil company in Sudan might lead to renewed pressure on U.S. investors who own the stock of its subsidiary, PetroChina. In May, Fidelity Investments Inc. said in a regulatory filing that it had cut its stake in PetroChina by more than 90%. The reduction came amid a campaign for the mutual-fund giant to divest from companies linked to Sudan, although Fidelity didn't state publicly whether the move was a direct response to it.
In May last year, the $230 billion California Public Employees' Retirement System, known as Calpers, put PetroChina on a list of nine companies linked to Sudan that it would stop investing in. Other states and university endowments, including Harvard's, also have sold their shares in the oil company.
However, shareholders in Warren Buffett's Berkshire Hathaway Inc. two months ago rejected efforts to get the U.S. investment company to sell its $3.31 billion stake.
I Made Sentana in Jakarta and Renya Peng and Shai Oster in Beijing contributed to this article.
Copyright (c) 2007 Dow Jones & Company, Inc.
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