BP Asset Sale: China Snaps Up Another Piece
BP has sold off another piece of its $250 billion oil and gas portfolio as part of its plan to raise $30 billion or more to pay for damages caused by its Gulf oil spill. The UK company said Tuesday it will sell almost all of its exploration and production fields in Pakistan to China's United Energy Group Limited.
BP's asset sale was bound to attract a number of small and large players. But so far, two buyers stand out -- China and Russia. BP has already sold some $21 billion of assets, according to a BP statement. Chinese companies have purchased nearly $8 billion worth, and TNK-BP, the joint venture between Russian oligarchs and BP, has bought upstream businesses and interests in Venezuela and Vietnam for $1.8 billion.
Two separate Chinese companies have purchased BP assets in the past two months. The most recent was today's announced sale to Hong Kong-based UEG. The purchase is UEG's first Pakistani venture and was made to enhance its position as an international energy company, provide current production and cashflow and access to a workforce trained by a global oil and gas company, according to a report released Tuesday. In short, UEG is buying a turnkey asset.
Last month, BP agreed to sell its 60 percent stake in Argentina's Pan American Energy for $7.06 billion to Bridas Corp., which is owned by China's CNOONC and the Bulgheroni family.
Nuts and bolts of the UEG deal
- UEG will pay $775 million in cash, including a $100 million deposit for nine producing and exploration blocks in Sindh province and four offshore explorations blocks in the Arabian Sea.
- BP Pakistan's current net production is about 35,000 barrels of oil equivalent a day.
- As of Dec. 31, 2009, proved reserves attributable to BP's shares in these assets were 43.1 million barrels of oil equivalent.
- The sale is expected to be completed by the first half of 2011.
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