CNOOC Ltd has sold a 3.06-percent interest in Indonesia's Tangguh liquefied natural gas project to Talisman Energy Inc for US$212.5 million, China's dominant offshore oil producer said yesterday.
This is believed to have settled a legal dispute between CNOOC and the Canadian firm over a stake in the US$5-billion BP Plc-led Tangguh development. Calgary-based Talisman is a spin-off of BP.
Beijing-based CNOOC said its working interests in Tangguh fell to 13.9 percent from 16.96 percent after the transaction, which became effective on January 1.
The Tangguh LNG plant, located in West Papua, has annual capacity of 7.6 million tons. The first LNG supplies are expected in late 2008.
Talisman had filed a lawsuit against CNOOC over a stake in the Tangguh project, claiming it was entitled to 44 percent of CNOOC's 17-percent interest in it. CNOOC then filed a counterclaim. The case was heard by a United States court last year.
40-year dispute
The dispute was originated almost four decades ago when Warrior International Corp entered into an agreement with Independent Indonesian American Petroleum Co and Carver Dodge International Co.
A section of the accord contains a mutual-interest clause, which provides that if a partner acquires any exploration interests in Indonesia, it must offer the other parties a participating share, according to court papers. Warrior International was later merged into Talisman following a series of deals.
CNOOC bought the interests in Tangguh in 2003 and raised its stake in 2004.
CNOOC fell 5.62 percent to HK$11.08 (US$1.42) in Hong Kong trading yesterday. The city's benchmark Hang Seng Index was down 4.25 percent.
"With significant presence remaining in the Tangguh project, we welcome Talisman as a new partner to further develop the gas business, which I believe will bring a generous return to the company and the shareholders as a whole," CNOOC Chairman and Chief Executive Officer Fu Chengyu said.
China National Offshore Oil Corp, CNOOC's state parent, has a 25-year contract to buy 2.6 million tons of LNG per year from Tangguh to supply its Fujian receiving terminal. Analysts said the contract won't be affected by the latest stake sale.