Fri, Oct 21, 2005 page11

• UAE company willing to wait for CPC over oil deal

  NO RUSH The Gulf-based investment company said it was prepared to give Taiwan more time to consider its offer to buy 20 percent of the state-owned refiner

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  Abu Dhabi, the world's fifth-largest holder of oil reserves, is prepared to give Taiwan more time to consider a US$5 billion offer for a stake in state-owned refiner Chinese Petroleum Corp (CPC, 中油) in a bid to clear obstacles to the sale.

  The Persian Gulf emirate's initial agreement to seek as much as 20 percent of Taiwan's largest refiner expires in the first week of November, said Mohammed Al Khaily, managing director of Abu Dhabi's International Petroleum Investment Co (IPIC). IPIC made the offer in May.

  "We are very interested to be in Chinese Petroleum as it's an attractive company, in a good position in Taiwan, with profitability growing," Khaily said in an Oct. 17 interview in Abu Dhabi, the largest member of the United Arab Emirates federation. The emirate may extend the offer by six months, Khaily said.

  The investment would be Abu Dhabi's first in Asia's sixth-largest economy and help Taiwan secure additional crude oil supplies. The nation's oil imports climbed 13 percent last year to 369 million barrels, 3.8 percent of that from the United Arab Emirates.

  The bid is a test of Taiwan's determination to privatize CPC, whose union argues that selling a stake to the emirate would be illegal.

  The Taiwanese government, which owns 100 percent of CPC, plans to reduce its stake to less than 50 percent by auctioning shares, according to the Council for Economic Planning and Development, the nation's top economic planner. There's no timetable for the sales, according to the council. Taiwanese law on privatizations states the government "should" invite public bids from potential investors.

  The refiner's union opposes the government plan on the grounds the country needs a state-run oil company to stabilize fuel prices and guard energy supply, and because of concern over employees' job security, said Chuang Chueh-an (莊爵安), chairman of the Taiwan Petroleum Workers' Union (台灣石油工會).

  "From a legal perspective, it's impossible" to sell a stake to Abu Dhabi without holding an auction, Chuang, said yesterday.

  "If the government wants to force it though, they can still sell shares in Chinese Petroleum," said Chuang, whose union represents the refiner's 15,000 workers. "But they can't cut a deal under the table."

  The legislature has demanded CPC get consent from the union and that the stock sale plan be approved by lawmakers before any auction can take place.

  The emirate pumps about 94 percent of the federation's 2.5 million barrels a day of oil production. That makes an alliance with CPC attractive to Taiwan, provided obstacles to the deal can be overcome, said economist Chen Shih-hau (陳詩豪).

  "Investment from a big Middle Eastern oil company would be a great guarantee of oil resources," Chen, a deputy director at the Taiwan Institute of Economic Research (台經院), said from Taipei on Oct. 12. "For IPIC, Chinese Petroleum has a sizable market share in Taiwan and provides a step toward entering the Asian market."

  As part of its May agreement with the Taiwanese refiner, IPIC agreed to consider investing in an US$11.6 billion chemical plant that CPC is helping develop in western Taiwan.

  Still, Abu Dhabi is more likely to participate in a chemical project with CPC in the Persian Gulf than in Taiwan, Khaily said.

  "We are already big in petrochemicals, but such a project in Abu Dhabi is a different thing," he said.

  CPC may use its ties with IPIC to develop a chemical plant in Abu Dhabi. "With its raw material, political stability and convenient port facilities, Abu Dhabi has lots of advantages," CPC Vice President Roy Chiu (邱吉雄) said in an interview from the Qatari capital, Doha, on Sept. 15.
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