CITIC Resources, the Hong Kong-listed arm of conglomerate CITIC Group, made its first entry into an overseas oil asset yesterday by buying a 51 per cent stake in an Indonesian field for US$97.4 million.

"We have already entered into an agreement with KUFPEC Indonesia to buy from the latter a 51 per cent participating interest in the Seram Island Non-Bula Block," said Shou Xuancheng, Vice-Chairman of CITIC Resources.

As the company's first-ever overseas oil asset acquisition, the deal will allow CITIC Resources to explore, develop and produce oil from Seram Island Non-Bula Block until 2019.

Seram Island Non-Bula Block's principal oil field, Oseil Field, had an estimated gross oil reserve of about 39 million barrels by December 2005, including 7 million barrels of proven reserves. It produced an average of 4,300 barrels of oil per day in the first half of 2006.

Shou said that completion of the acquisition was now waiting on final approval from the Indonesian Government and its regulatory bodies.

"We have regular contact with the Indonesian government and other (regulatory) bodies we should be able to get the final approval at the end of August or early September," he said.

Shou, who worked as a senior oil exploration expert and consultant for China's top oil producer China National Petroleum Corp for over three decades before joining CITIC Resources, said that the new phase of Indonesia's oil field was the company's first step to explore oil reserves, particularly in Southeast Asia.

"Energy products such as oil will become our flagship product," said Shou, who told reporters yesterday that a team of about 30 oil professionals was working on the firm's future oil exploration plan in Southeast Asia.

"We will continue to observe and assess other oil fields in the region (Southeast Asia)," Shou said.

CITIC Resources will fund the Indonesian acquisition through internal resources and existing facilities.

The company currently has US$100 million cash in hand and another US$200 million worth of bank loans.

Source: China Daily