TNK-BP grabs troubled BP’s assets

TNK-BP, a  joint venture in which BP holds a 50 per cent stake, said it would pay $1.8 billion for BP’s assets in Venezuela and Vietnam.

The agreements include BP’s 35 per cent operating interest in offshore Block 06.1, approximately 370 kilometres off south east Vietnam, 32.67 per cent interest in the 370 kilometre 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.

Since last July when BP announced its Vietnam assets selling plan to cover the expenses from the devastating Gulf of Mexico oil spill occurring in April, concerns had risen from Vietnamese experts about who would be the replacement investors.

Some experts even suggested the Vietnamese government establish conditions for BP to choose partners, or give incentives for PetroVietnam to buy out BP’s assets. As a stakeholder in BP’s projects, PetroVietnam had the right to be the first offered to buy BP’s assets.

Responded to the agreements, PetroVietnam’s chairman Dinh La Thang said PetroVietnam had considered buying the assets. “But such deals must ensure efficiency. We would not buy them at any costs.”

Thang told VIR that the choice of new partners in these projects would be important as it was directly related to not only the project’s efficiency, but also long-term interest of the stakeholders.

According to a local oil and gas sector expert, a Russian partner taking over BP’s assets in Vietnam was “good news” for Vietnam,  based on two countries’ long relations in oil and gas cooperation.

The Vietnam-Russia Petroleum Joint Venture, or Vietsovpetro, is now in its 27th year operation in Vietnam, occupying roughly 80 per cent of Vietnam’s oil and gas products, contributing more than $20 billion and less than $6 billion to Vietnamese and Russian government budgets, respectively. The joint venture is among foreign-backed firms with largest tax contribution in Vietnam.

Apart from that, recently Rusvietpetro, a joint venture between Vietnam and Russia, received its first oil output from four blocks in the central Khorei Ver region of Russia’s Nenets autonomous district, with the industrial capacity of 3,000 tonnes crude oil per day, or 21,000 barrels per day. Another joint venture Vietgazprom has been established in the two nations’ oil and gas sector. 

TNK-BP’s statement said the acquisitions would be financed entirely through the company’s available resources and would not require additional capital from the shareholders of TNK-BP.

According to TNK-BP, under the terms of the agreements, it will pay BP a total deposit of $1 billion on October 29, with the balance of payment due on completion of the sales. Subject to regulatory and other third party approvals, and other customary conditions, the parties anticipate completing both sales in the first half of 2011.