UPDATE 1-Malaysia YTL Power acquires 30 pct stake in Jordan shale project

Tue Dec 14, 2010 9:53am GMT

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* YTL Power in first foray in upstream oil business

* Jordan shale project's capital cost is $5 billion, says director

* YTL Power to develop oil plant with partners (Adds details, quotes)

By Saumyadeb Chakrabarty and Min Hun Fong

KUALA LUMPUR, Dec 14 (Reuters) - Malaysia's YTL Power has acquired a 30 percent stake in Estonian state oil company Eesti Energia's oil shale project in Jordan, marking its foray into the upstream oil business, the power producer said on Tuesday.

YTL Power is joining power and utility companies from India, South Korea and Japan in investing in overseas fuel assets to manage the escalating costs of fuel and gas.

Under the agreement, Eesti Energia and its Jordanian partner Near East Investment, along with YTL Power, will develop an oil plant with an output of about 38,000 barrels per day (bpd) and a 900 megawatt oil-shale fired power plant.

"We are going into Jordan on a holistic basis, which means we are going to be involved in every part of the project," YTL Power's Director of Financial Analysis Lucius Chong told Reuters.

"This is our first time in the country and the first time we are working with oil shale, which is why we have entered into a partnership with Eestie Energia."

Chong declined to put a specific dollar value on YTL Power's investment into Jordan, but said the project's capital costs is about $5 billion.

Eestie Energia is the world's largest producer of shale oil. The Estonian government had considered listing a minority stake in the power company, but shelved the IPO due to market instability.

Chong said YTL Power first became interested in the upstream side of the oil business after acquiring Power Seraya from Singapore's Temasek Holdings in 2008.

YTL Power owns and operates about 5,500 megawatts of gas, oil and coal-fired power generation plans in Malaysia, Singapore and Indonesia. It also owns Wessex Water Services Ltd, a water and sewerage company in the southwest of England.

"This (the investment in Jordan) fits well with our strategy of investing in natural resource-based energy infrastructure," said Yeoh Seok Hong, executive director of YTL Power, in an emailed statement.

Malaysian national oil company Petronas has been active in acquiring overseas upstream energy assets for the past 15 years, with a third of its revenues and oil coming from abroad. Asia's state energy companies led by China, India, South Korea and Japan are also increasingly competing for assets against oil majors.

European utilities have bought into oil and gas fields in the North Sea, spurred by high gas and fuel prices and replacing some of the major oil companies that have dominated the region since the 1960s.

Earlier this year, Eesti Energia had agreed on a 40-year concession to exploit oil shale in the Attarat Umm Ghudran oil shale deposit with the government of Jordan.

Estonia is heavily dependent on oil shale for energy and its state-owned energy firm is seeking to branch out to other countries to make use of its oil shale expertise as the largest processor of oil shale in the world.

Jordan has up to 80 billion tonnes of oil shale, according to Eestie Energia's website. For more coverage on the future of shale gas, click on [ID:nN18229665].

YTL Power shares rose 0.4 percent on Tuesday on the local bourse. They have risen about 8 percent this year, trailing the 18 percent rise in the broader market . (Editing by Ramthan Hussain)

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