BP to sell Venezuela and Vietnam businesses

LONDON Viet Nam News/Asia News Network

BP has reached an agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP, Russia’s third largest oil company. The US$1.8 billion sale agreement includes BP’s interests in the Petroperij, Boquerin and PetroMonagas joint ventures in Venezuela and, in Vietnam, BP’s 35 percent operating interest in the Lan Tay and Lan Do gas fields and associated pipeline and power generation interests. TNK-BP, owned equally by BP and the AAR Consortium (comprising Alfa Group, Access Industries and Renova), has agreed to pay BP US$1.8 billion in cash, subject to certain post-closing adjustments. Under the terms of the agreement, TNK-BP will pay BP a total deposit of US$1 billion on Oct. 29, with the balance of payment due on completion of the sales. The purchase of the assets will be funded by TNK-BP and will not require capital from the company’s shareholders. BP will retain an economic interest in these assets through its 50-percent interest in TNK-BP. Subject to regulatory and other third-party approvals, and other customary conditions, the parties anticipate completing both sales in the first half of next year. It is expected that the majority of 175 staff employed in the businesses in Vietnam and Venezuela will transfer to TNK-BP on completion of the deal. “Today’s (Oct. 19) agreement is further evidence of the rapid progress BP is making towards the divestment target we set out in July,” said Bob Dudley, BP group chief executive. “These are robust businesses which offer both existing production and potential opportunities for future growth. We believe they will offer TNK-BP a solid foundation as it builds its business outside Russia.” The TNK-BP’s CEO Mikhail Fridman said the acquisitions in Venezuela and Vietnam marked a milestone in TNK-BP’s strategic expansion in the global energy market. “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,” Mikhail said.

The sales is part of BP’s plan to make divestments of up to US$30 billion by the end of next year, in an effort to meet its financial obligations arising from the recent Gulf of Mexico oil spill. As part of this program, BP has previously announced agreements to sell assets in Egypt, Canada and the U.S. to Apache Corporation for US$7 billion and to sell its Colombian exploration, production and transportation business to Talisman and Ecopetrol for US$1.9 billion.

The agreement does not affect BP’s other business activities in Vietnam, including a significant lubricants blending and marketing business, nor in Venezuela.