Singapore Temasek to strike out into oil, gas ventures
New subsidiary Orchard Energy may be answer to supply security concerns
By RONNIE LIM
(SINGAPORE) With oil prices continually testing new peaks - they touched US$118 a barrel yesterday - Temasek Holdings is entering into big-money exploration and production (E&P) ventures in oil and gas to ensure Singapore’s energy supply security.
So, for the first time, Temasek has set up an E&P subsidiary, Orchard Energy Pte Ltd. And in a clear indication that Orchard is preparing to strike out into E&P joint ventures regionally and beyond, it has been recruiting a team of oil specialists, sources told BT.
‘Mostly foreign talent, they include geophysicists, geologists and petroleum engineers who can help Temasek assess potential E&P property that the Singapore investment company can put money into,’ one source said.
BT has also ascertained that Temasek managing director Tan Suan Swee is heading Orchard Energy as its director, with Greg Solomon being its ventures director. Mr Tan was unavailable for comment as he is on an overseas trip.
The Orchard Energy venture marks Temasek’s return to the offshore arena after it failed in 2004 to buy into Indonesia’s largest listed oil and gas company, Medco Energi.
Temasek was named the preferred bidder for a 44.9 per cent stake in Medco, but the company’s founder, the Paniogoro family, eventually exercised its pre-emptive right to match Temasek’s bid and bought back its stake.
Temasek’s bid to acquire Medco was not seen as a mere investment play, but also one that would potentially boost supply security for the Republic, especially given its dependence on Indonesian natural gas supplies.
‘Although SembCorp recently managed to get more Indonesian gas, the talk is that this (supply) is drying up,’ one source said yesterday.
He was referring to SembCorp Gas’s recent US$5.5 billion deal to buy an additional 86 million standard cubic feet daily from Natuna for 7-10 years, which adds about 26 per cent to its current Indonesian supplies.
Singapore is also preparing to source liquefied natural gas (LNG), to supplement its Indonesian and Malaysian piped gas supplies, and just last Friday appointed a sole LNG buyer which is expected to source for the LNG from Egypt, Trinidad & Tobago, Equatorial Guinea, Nigeria, and Australia’s Queensland project.
A Reuters report yesterday cited a Temasek source saying that its new E&P venture could potentially look at participating in ventures in the Gulf of Thailand and offshore Myanmar.
Orchard is also unlikely to be a passive investor in the E&P ventures; it hopes to quickly become a lead operator working with more established upstream firms, the source reportedly said. This explains why it has been aggressively recruiting upstream specialists for its operations.
Temasek also has a deemed interest of 45.7 per cent (through KepCorp and DBS) in Singapore Petroleum Company (SPC), which has been aggressively building up its upstream asset portfolio.
SPC in its just-released 2007 annual report said that its average oil/gas production had shot up to 10,000 barrels of oil equivalent a day by end-2007 - from below 3,000 barrels at the start of the year.
This came from its acquisition of producing oilfields in China’s Bohai Bay, as well as production from its Indonesian Kakap and Oyong fields.
Orchard, which was incorporated with a share capital of S$5 million, is also seen by some analysts as a bid by Temasek to diversify its financials-heavy global investment portfolio of some S$164 billion.
Source : Business Times - 23 April 2008
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