PetroChina buys Singapore refiner for $2.2 billion

HONG KONG: PetroChina Co agreed to pay as much as $2.2 billion to buy Singapore Petroleum Corp to gain a foothold in Asia���s largest oil trading centre in an acquisition that may extend China���s influence over global resources pricing.

PetroChina, China���s biggest oil producer, will buy 45.5% of the Singapore refiner for S$1.47 billion ($1 billion), or S$6.25 a share, from Keppel Corp, 24% higher than the last-traded price of S$5.04 at the May 22 close. The transaction, when completed, will trigger a general offer for the remaining shares, the Beijing-based oil company said.

About 10 million barrels of oil, or 12% of the world���s daily output, pass through the Straits of Malacca off Singapore each day, according to the International Energy Agency. The Chinese government introduced a market-based fuel-pricing system in December that takes into account crude oil costs and ensures refiners a profit.

���The deal gives PetroChina immediate access to increased refining capacity to take advantage of higher domestic prices down the road,��� said Gordon Kwan, an energy analyst at Mirae Asset Securities in Hong Kong. ���On the flip side, if China fails to enforce the domestic product pricing reform, PetroChina can utilize SPC as an vehicle to sell fuel prices at international levels.���

Singapore Petroleum shares rose 20% to S$6.05 while Keppel Corp, the world���s largest maker of oil rigs, climbed 4.6% to close at S$7.28. PetroChina shares rose 1.9% to 13.1 yuan at the close in Shanghai and fell 0.8% to HK$8.32 in Hong Kong.

Keppel Corp expects a profit of S$660 million from the sale of its stake in Singapore Petroleum, the company said in a statement to the Singapore stock exchange.