TNK-BP to buy BP assets in Venezuela, Vietnam for $1.8 billion

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 18 -- BP PLC said it has agreed to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP for a total of $1.8 billion.

BP said the agreement includes its interests in the Petroperija, Boqueron, and PetroMonagas joint ventures in Venezuela. In Vietnam, the agreement includes BP's 35% operating interest in Lan Tay and Lan Do natural gas fields along with associated pipeline and electric power generation interests.

The sales are part of BP's plan to make divestments of up to $30 billion by yearend 2011 to help the company meet its financial obligations arising from the recent Gulf of Mexico oil spill.

“Today’s agreement is further evidence of the rapid progress BP is making towards the divestment target we set out in July,” said BP group chief executive Bob Dudley.

“Given Russia’s strong relationships with Vietnam and Venezuela, we are sure that this transaction will create significant value both for TNK-BP and our local partners,” said TNK-BP Chief Executive Officer Mikhail Fridman.

Under terms of the agreements, TNK-BP will pay BP a total deposit of $1 billion on Oct. 29, with the $800 million balance due on completion of the sales. The two firms anticipate completing both sales in first-half 2011.

TNK-BP is owned equally by BP and the AAR Consortium (comprising Alfa Group, Access Industries, and Renova). As a result, BP will retain an economic interest in the Venezuelan and Vietnamese assets through its ongoing interest in TNK-BP.

BP's interests included in the agreement for the Venezuelan sale are a 16.67% stake in the PetroMonagas SA heavy oil JV in the Orinoco basin, a 40% in the Petroperija SA venture, and a 26.67% interest in the Boqueron SA venture.

All of the projects are operated by Venezuela's state-owned Petroleos de Venezuela SA. BP's total net production from Venezuela is 25,000 boe/d.

BP's interests included in the agreement for the Vietnamese sale are a 35% interest in offshore Block 06.1, currently operated by BP, approximately 370 km offshore south-east Vietnam and containing the Lan Tay and Lan Do gas fields.

BP also has a 32.67% interest in the 370 km Petrovietnam-operated Nam Con Son pipeline that transports gas onshore from the Lan Tay and Rong Doi fields, and a 33.3% interest in the JV that owns and operates the 739-Mw Phu My 3 power plant in Baria Vung Tau province. BP's current net entitlement to production from Vietnam is 15,000 boe/d.

BP's net booked reserves associated with all these assets total some 270 million boe. BP said the agreement does not affect its other business activities in Vietnam, including a significant lubricants blending and marketing business, nor in Venezuela.

Last month, Petronas agreed to buy BP PLC’s Malaysian ethylene and polyethylene production for $363 million in a transaction expected to close by yearend, subject to certain conditions (OGJ Online, Sept. 1, 2010).

In August, BP agreed to sell its wholly owned BP Exploration Co. (Colombia) Ltd. for $1.9 billion to a consortium of Talisman Energy Inc. and Colombia's Ecopetrol SA (OGJ Online, Aug. 9, 2010).

In July the firm entered into several agreements to sell Apache Corp. some of its upstream onshore assets valued at $7 billion (OGJ Online July 26, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

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