PetroChina, the world's second-most valuable oil and gas company after Exxon Mobil Corp yesterday said it was buying a 45.5-per cent stake in oil refiner Singapore Petroleum Company (SPC) for S$1.47 billion ($1.02 billion).

The agreement was signed between PetroChina's indirectly wholly owned subsidiary, PetroChina International (Singapore) Pte Ltd, and Keppel Oil and Gas Services Pte Ltd, a wholly owned subsidiary of Singapore-based Keppel Corporation Limited, which is part-owned by Singapore investment company Temasek Holdings Pte. Ltd.

PetroChina, the most profitable company in Asia said in a statement, ''After PetroChina International (Singapore) Pte. Ltd. purchases the stake in SPC, SPC will become a new platform for the implementation of our international strategy and will provide a broader foundation and stable path for development.

The acquisition is likely to become ''a new platform for the implementation of our international strategy and will provide a broader foundation and stable path for development,'' PetroChina said in a statement.

The agreement signals China's continued interest in extending its reach into global natural resources at a time when many resources companies are desperate for cash.

This will be China's first major offshore purchase of a downstream energy company, when price of oil has come crashing down to approximately $60 a barrel from July's high of $147 a barrel.

PetroChina and Keppel also plan to explore opportunities in the offshore oil industry and expect to realise more mutual interests, PetroChina said.

Once the deal is approved by Chinese regulators and closed, it will trigger a general offer for the entire business under Singapore's takeover code. The offer values the entire company at $2.25 billion.

Singapore Petroleum, one of the island state's three major refining companies, has exploration interests in Australia, China, Indonesia and Vietnam. It reported 2008 revenue of S$11.1 billion.

China's state oil companies are hunting for acquisitions abroad at a time when they have access to greater cash reserves than many international peers.

The company's in the recent past mainly focused on markets or regions with unstable political regimes that were largely ignored by Western oil companies. More recent acquisitions have included oil fields in Syria and a China National Offshore Oil Corp. takeover of a oilfield-services company in Norway.

China has been a chief source of funding for natural-resource companies, included several recent oil-for-loan deals between Chinese policy banks and national oil companies in Russia and Kazakhstan. China also signed a deal with Brazil to guarantee oil supplies in exchange for helping to finance Brazil's aggressive oil-exploration plans.

During its annual general meeting last month, PetroChina president Zhou Jiping hinted global economic downturn as an opportunity to hunt for overseas acquisitions and ventures.

''Depressed oil prices and the global credit crises have left smaller oil companies scrambling for cash, creating an opening for Chinese natural-resource companies, which still have access to financing from the country's robust banking sector, Jiping said.

He also said overseas acquisitions are always a key point for PetroChina's strategic development.

PetroChina, which is the world's second-biggest company by market value after Exxon Mobil Corp, had raised 150 billion yuan ($22 billion) in funds last year to finance its working operations, investment activities and for likely increased tax payments. (See: PetroChina seeks to raise 150 billion yuan ($22 billion) to improve cash flow)

It had also issued an $11.7 billion of medium-term corporate bonds, which was the biggest ever domestic issue by a Chinese listed company in 2008.

PetroChina's state-owned parent company, China National Petroleum Corp, recently agreed to buy Kazakh oil producer MangistauMunaiGas in partnership with Kazakhstan's state-owned KazMunaiGas for $3.3 billion. (See: CNPC to buy 49 per cent in Kazakh oil major for $10 billion).

China is the world's second-largest oil consumer and the government promotes its oil companies to sign a series of similar pacts with oil producers Russia, Brazil and Venezuela in recent months to meet the country's oil consumption requirements by imports around 2010. (See: China, Kazakhstan to seal $10 billion loan-for-oil deal)

PetroChina chairman Jiang Jiemin said a pipeline carrying crude oil from Kazakhstan to China will be operational by the fall, and the company is developing plans for a pipeline to carry natural gas from Central Asia all the way to Hong Kong.

Russia, which agreed in February to supply China with oil for 20 years in return for $25 billion in credit, is in discussions with China for additional loans for natural gas supplies.

China secured similarly advantageous assurances in February, when it signed a long-term oil supply contract and pipeline deal with Russia worth $25 billion.
It has signed similar deals with Brazil and Venezuela this year.

PetroChina is among the 10 most profitable companies in the world. Net profits of these top 10 companies each exceeded 100 billion yuan ($14.6 billion) in 2008. Five of them are oil companies, with ExxonMobil coming first, followed by the Royal Dutch/Shell Group of Companies.

Impacted by global recession and shrinking domestic market, PetroChina's profit fell 22 per cent last year, its first such drop since 2001. Oil production fell 5.7 per cent in the first quarter compared with a year earlier.

Despite a drop in profit, PetroChina was boosted by a recent increase in oil prices, which is expected to bring about an extra 1.26 billion yuan in monthly revenue, the company said.

The government raised the benchmark retail prices of gasoline by 290 yuan ($42.46) per tonne, or 5 per cent, and diesel by 180 yuan per tonne, or 3.7 per cent, in March end.