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Petronas eyes Texaco Burma stake, T (r)
- Subject: Petronas eyes Texaco Burma stake, T (r)
- From: sbillenness@xxxxxxxx
- Date: Tue, 10 Jun 1997 14:02:00
Subject: Petronas eyes Texaco Burma stake, Texaco eyes image
KUALA LUMPUR, June 10 (Reuter) - Malaysian national oil firm
Petronas is studying the purchase of Texaco Inc's 42.9 percent
stake in Burma's Yetagun gas field, president and chief
executive Hassan Marican said on Tuesday.
If concluded, Texaco <TX.N> would be the latest U.S. company
to withdraw from Burma amid protests by activists against the
human rights record of Rangoon's ruling generals.
It would also be a blow to other U.S. oil companies, which
are lobbying against sanctions imposed by Washington over
alleged political repression, analysts said.
Texaco is the largest shareholder and operator of the
Yetagun, which lies 125 miles off Burma's western coast in the
Indian Ocean and has estimated gas reserves of one trillion
cubic feet.
It is expected to start production in 1999 and has already
secured a 30-year gas sales agreement with Thailand.
Marican said Texaco had appointed an investment banker to
look for buyers of the U.S. oil giant's stake.
``We have been approached by the investment banker. Yes, we
are looking and studying the opportunity,'' he told reporters on
the sidelines of an industry conference in Kuala Lumpur.
Texaco was not immediately available for comment.
Texaco said in May it might sell the stake, citing financial
reasons, rather than a response to human rights issues.
But analysts questioned the timing of Texaco's move, coming
so soon after Washington announced sanctions.
``You can look at the timing of it. The two issues are
clearly linked,'' said Robin Shoemaker, oil and gas analyst at
investment bank Lehman Brothers in Hong Kong.
But at the same time a withdrawal from Burma would clearly
help boost Texaco's domestic U.S. image, which has suffered in
the past year.
The company settled a racial discrimination suit for $115
million last year. It has also faced allegations of causing
pollution to rainforests in Ecuador, which the company denies.
Burma protests added to the company's public image woes.
``They are not affected by the sanctions, but they have faced
a lot of pressure from lobbyists. It would help their U.S.
image,'' said Gordon Kwan, oil and gas analyst at Daiwa
Securities in Hong Kong.
Texaco is expected to find several willing buyers apart from
Petronas for its stake.
``It's a highly attractive commercial proposition,'' said
Shoemaker.
But Texaco's withdrawal from Burma could mean that the oil
lobby working against sanctions would lose an influential
member.
Unocal Corp <UCL.N>, which has a 28 percent stake in the
US$1.2 billion Yadana gas field, Texaco and Atlantic Richfield
Co <ARC.N> (ARCO) are the biggest oil investors in Burma.
They have argued that unilateral sanctions do not work and
the best way to promote change is from within the country
through investment.
But Shoemaker said that at the end of the day each company
had its own agenda.
``Each company has separate interests and have made their own
determination as to what was in their own interests,'' he said.