Singapore Petroleum Co., the only oil refiner traded on the city's exchange, will boost production at its fields in Asia as crude oil prices climb.

The refiner will spend $50 million to $60 million to drill as many as 19 wells this year to increase crude output at its fields in Bohai Bay in eastern China, Vietnam, Australia and Indonesia, Chief Executive Officer Koh Ban Heng said on a conference call with analysts today.

Crude production contributed 32 percent to Singapore Petroleum's operating profit in the first quarter and may help boost earnings as oil prices advance. Crude in New York surged to a record $119.90 a barrel yesterday, partly on concern that global supply may be disrupted.

The company produces about 9,500 barrels a day of crude from its fields in Bohai Bay and Indonesia, Koh said. The company wants to achieve an output rate of 11,000 barrels a day by the year-end, Lee said.

``We are focusing on our existing assets to achieve organic growth in the next two years,'' Koh said. Some fields may start producing in early 2009, he said, adding that the company is ``optimistic'' about its recent petroleum discoveries in Vietnam.

Oil prices at around $120 a barrel will make it ``difficult'' for the company to buy ``good producing assets,'' Chief Financial Officer Lee Chiang Huat said on the same call. ``Sellers will be looking at $120 a barrel.''

Refining Profitability

Profitability from turning crude into fuels for Singapore Petroleum in the first quarter lagged behind the industry average. The refiner made $7 a barrel from processing crude, almost unchanged from 2007, Lee said. That's less than the industry's refining profit of $9.39 a barrel in the same period, according to data from Merrill Lynch & Co.

The potential for higher crude oil production may ``take concerns off'' the refining segment, said Robert Adair, an energy analyst with CIMB-GK Research Pte in Singapore. The refiner yesterday posted a 12 percent drop in first-quarter profit on lower fuel-oil sales.

Singapore Petroleum is partially shutting its 285,000 barrel-a-day refinery on Jurong Island in the second quarter for planned maintenance, and capacity will fall to 95 percent, Lee said. Its ability to process crude will decline by 3 percent as a result, compared with the first quarter, the company said in a statement yesterday.

Middle Distillates

The refiner increased production of middle distillates, including diesel and jet fuel, in the first quarter to take advantage of higher product prices, Koh said. The company boosted its processing of lighter Middle Eastern crude grades including Oman and Lower Zakum as they have a higher yield of the two fuels, he said.

Diesel prices surged 18 percent in the first quarter and rose to a record $144.25 a barrel on April 21 in Singapore, an Asian benchmark, according to data compiled by Bloomberg News. Jet fuel climbed 16.5 percent in the same period and was at an all-time high of $143.85 a barrel yesterday.

Prices of diesel jumped in the first three months as Chinese imports of the fuel gained more than seven times to 1.66 million metric tons. Demand for the fuel to run power generators rose during China's worst snowstorms in more than half a century.

Singapore Petroleum incurred losses on U.S. dollar- denominated derivative positions it took to hedge against a potential drop in oil prices, Lee said. Hedging costs jumped S$10 million in the first quarter from a year earlier, he said. Oil prices had risen instead and the U.S. currency weakened against the Singapore dollar.

The refiner declined as much as 50 Singapore cents, or 6.2 percent, to S$7.61, and traded at S$7.71 at the midday break. The benchmark Straits Times Index gained 0.5 percent.