Unocal Corp has acquired the Thai operation of BP America Production Co, which owns a gas-prospecting concession in an area claimed by both Thailand and Cambodia in the Gulf of Thailand.
The acquisition represents a strategic move by Unocal to significantly boost its hydrocarbon portfolio in Thailand and neighbouring countries such as Vietnam and Burma where it has stepped up its upstream exploration and production interests.
In particular, Unocal has strengthened its gas-based assets in Thailand where it plans to spend US$4 billion over the next decade, on top of $6 billion spent over the last 40 years.
The terms of the purchase of all the shares of Amoco Thailand Petroleum Llc, a unit of BP America Production, by Unocal Thailand, an affiliate of Unocal Corp, were not disclosed officially.
However, insiders described the deal as significant, given the high expectation of substantial gas and condensate reserves lying in the tracts but not developed over the last three decades due to then unresolved territorial disputes between Thailand and Cambodia.
Amoco Thailand Petroleum owns half the exploration concession blocks 5 and 6, which cover a combined area of 10,155 square kilometres in what is officially called the Thai-Cambodia Overlapping Claims Area.
The other half is owned by Idemitsu Oil & Gas Co of Japan.
In June last year, the Thai and Cambodian governments signed a memorandum to provide a framework for resolving the disputes. Blocks 5 and 6 will be divided into separate Thai and Cambodian parts.
Although final resolution of the issue would take some additional time to complete, purchasing Amoco Thailand's shares showed Unocal's commitment to long-term growth in Thailand, said Randy Howard, the president of Unocal Thailand.
Blocks 5 and 6 will complement Unocal Thailand's existing gas producing blocks in the Gulf, namely blocks 10,11 and parts of 12 and 13.
Once the boundary issues are resolved, Unocal Thailand expects to begin a three-dimensional seismic survey in the first year, followed by exploration drilling in the following years.
Unocal Thailand is the largest gas producer in Thailand, delivering more than 1,000 million cubic feet per day of natural gas, nearly half the total indigenous production of natural gas.
Insiders said Unocal secured the Amoco Thailand shares in a contest which had drawn the participation of major oil firms including ChevronTexaco, which has also been seeking to expand its exploration and production profile in Thailand. ©