Chances remain to buy BP assets

Phung Dinh Thuc, director general of PetroVietnam, told a local newspaper that BP and TNK-BP

had directly informed PetroVietnam of the agreement.

“It said TNK-BP was up to now the only partner chosen to make direct negotiations and suggested the Russian company as purchaser,” Thuc was quoted as saying.  

A Russia-based TNK-BP spokesman told VIR there were pre-emption rights on behalf of PetroVietnam and India’s Oil and Nature Gas Corporation (ONGC), who also own stakes in these assets. 

“Both PetroVietnam and ONGC have a period of 60 days to decide whether they will or will not pre-empt and make their own bid for these assets,” the official confirmed. 

He said that TNK-BP was confident that it was in a good position to complete the agreed transactions.

“BP did not let us know about the price of its stakes, but it is certainly equivalent  to the price offered by TNK-BP. If the price is reasonable for us, we will make a decision to buy the assets,” Thuc added.  

TNK-BP signed an agreement with BP on October 18, 2010 to acquire assets in Vietnam and Venezuela for a total overall price of $1.8 billion. TNK-BP expects the deal to be completed in the first half of 2011. 

Meanwhile, the spokesman declined to release the exact figure for each asset and confirmed that the assets in Vietnam and Venezuela were offered by BP to TNK-BP as one deal package. 

“The $1.8 billion is the overall price TNK-BP will pay for assets in both countries and it is not possible to split up the price by country or assets,” he said.

TNK-BP is Russia’s third largest oil company, is owned equally by BP and AAR Consortium grouping Alfa Group, Access Industries and Renova.  

Under the agreement, TNK-BP would pay BP a total deposit of $1 billion on October 29, with the balance due upon completion of the sale expected in the first half of next year.  

The TNK-BP source confirmed to VIR that the company had a healthy cash position of over $2 billion, as well as a low financial gearing at 20 per cent which provided it with ample opportunity to raise debt at favourable rates. 

“As such, we do not foresee any issues in meeting this part of the agreement,” he added. 

The agreements include BP’s 35 per cent operating interest in offshore 06.1 Block, approximately 370 kilometres off south east Vietnam, 32.67 per cent interest in the 370km Nam Con Son associated pipeline system and 33.33 per cent in 739 megawatt Phu My 3 power plant in Ba Ria-Vung Tau province.

The agreement is said not to affect BP’s other business activities in Vietnam, including a significant lubricants blending and marketing business.