TNK-BP embraces PetroVietnam

TNK-BP, a company processing procedures to buy BP’s assets in Vietnam, yesterday announced it had signed a cooperation agreement with state-run PetroVietnam.

According to the agreement, PetroVietnam will support TNK-BP’s entry into the local oil and gas market through the acquisition of BP’s stake in upstream gas producer Block 6.01 and support TNK-BP’s intention to further expand its downstream and upstream business in Vietnam.

Additionally, TNK-BP will support PetroVietnam to develop its upstream business in Russia and the two companies will enter into negotiations concerning the establishment of a joint venture in Russia.

As part of the cooperation agreement, TNK-BP will consider further East Siberia-Pacific Ocean (ESPO) crude supply contracts to Vietnam on a long-term basis. TNK-BP is Russia’s third largest oil company, 50 per cent held by BP and 50 per cent held by the AAR Consortium (Alfa Group, Access Industries, and Renova).

Previously on September 20, 2010, TNK-BP signed a long term contract to supply Russian ESPO crude oil blend to Vietnam. The first 100,000 tonne shipment under the new contract will be delivered this month.

According to TNK-BP, the ESPO oil blend has been supplied via ESPO pipeline and loaded for export in the port of Kozmino since January, 2010. TNK-BP is supplying oil from the Verkhnechonskoe field (Irkutsk region).

On October 18, 2010 TNK-BP and BP reached an agreement for TNK-BP to acquire BP’s upstream and pipeline assets in Vietnam and Venezuela for an overall price of $1.8 billion.

A $1 billion deposit was made by October 29, 2010 with a final payment upon completion. Subject to governmental approval and the fulfillment of other agreed pre-closing conditions, the companies expect the transaction to be completed in the first half of 2011.

In Vietnam, TNK-BP will acquire a 35 per cent stake in Block 06.1 containing the Lan Tay and Lan Do gas condensate fields, a 32.7 per cent stake in the Nam Con Son Pipeline and Terminal, and a 33.3 per cent stake in the Phu My 3 power plant.

Together, these assets form an integrated gas and power chain with a production capacity of 30,000 barrels of oil equivalent per day, or 15,000 barrels per day on a net entitlement basis.

“The acquisitions in Venezuela and Vietnam mark a milestone in TNK-BP’s strategic expansion in the global energy market,” said Mikhail Fridman, executive chairman of TNK-BP.

“Our company’s ambitious yet highly focused and disciplined diversification provides TNK-BP with an excellent platform for further growth and profitability, while also helping develop new competencies that can be applied at home. 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,” Fridman said.

Regarding the sale of the Vietnamese and Venezuelan assets, BP chief executive officer Robert Dudley, said: “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”.

Lexicon Partners acted as financial advisor to TNK-BP’s board of directors, Credit Suisse acted as financial advisor to TNK-BP management, while Goldman Sachs advised BP.- VIR

Tags: PetroVietnam, TNK-BP