Sinopec to acquire stake in Chevron’s Indonesian gas project for $680 million

China's state-owned Sinopec, Asia's largest crude refiner, will acquire an 18-per cent stake in Chevron's $8-billion Gendalo-Gehem deep water natural gas project in Indonesia, for $680 million.

Chevron, which has been operating in Indonesia for over 80 years and is one of the largest oil and gas producers in the south east Asian country, had said in November 2009 that it would seek partners for a partial farm-down of its holding in the Gendalo-Gehem project in order to alleviate risk in the venture.

Chevron, based in San Ramon, California, owns 80 per cent of the project, while Eni of Italy and Indonesia's state-owned oil and gas company PT Pertamina own the remaining 20 per cent.

This is the second deep water acquisition for Beijing-based Sinopec, which is trying to gain experience in deep water exploration through buying stakes, where overseas oil majors are the operator of the oil and gas fields.

All Chinese oil companies have sufficient technical know-how in shallow water operations, but lack the skill and technology in deep water exploration and drilling.

Sinopec will gain technical experience in deep water gas exploration through this acquisition since the gas deposits in the Gendalo-Gehem project lie beneath 6,000 feet of water.