BP may not sell stake in Vietnam gas project to ONGC

In a setback to Oil and Natural Gas Corp (ONGC), UK's energy giant BP Plc today said the company will offer its stake in a gas project in Vietnam to an affiliate firm first.

 

BP Plc chief executive officer Robert Dudley, who took over from Tony Hayward last Friday, was in India today meeting partners Mukesh Ambani of Reliance Industries and Ratan Tata of Tata Group in Mumbai and oil minister Murli Deora here.

 

Flanked by Hayward, Dudley said BP was yet to decide on selling its stake in the $1.3 billion Nam Con Son gas project in Vietnam. But it was to do so as part of effort to raise finances for meeting the Gulf of Mexico oil spill liability, BP will first offer the stake to its affiliate.

 

If BP decides in favour of exiting Vietnam, "we may transfer (the Vietnam stake) to an affiliate," he said.

 

TNK-BP, BP's Russian joint venture, will make an offer to buy BP's stake in the offshore natural-gas project in Vietnam.

 

Asked if TNK-BP may be a possible buyer, he said: "That is an affiliate company and that is a possibility".

 

Dudley said that his meetings with Ambani and Tata were to review on-going projects that BP has with the two companies.

 

BP and Reliance Industries had won a deep-sea block (D17) in 7th round of New Exploration Licensing Policy (NELP) where the two firms are planning to shoot seismic before deciding on drilling wells.

 

With Tata, BP has a solar project in Bangalore which was reviewed in meeting with Ratan Tata, he said.

 

The new BP CEO, who had a late dinner meeting with top government officials at Deora's residence, will meet prime minister Manmohan Singh tomorrow morning.

 

OVL, the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC), is keen on buying BP's 35% stake in the Nam Con Son gas project in Vietnam.

 

It had even roped in Vietnam's PetroVietnam for buying BP's stake in two offshore gas fields, a pipeline and power project -- together referred to as Nam Con Son. But new BP CEO's statement will be a setback to its plans.

 

Block 06.1, where the Lan Tay and Lan To fields currently produce about 14 million cubic metres of gas per day, was originally allocated to OVL, but due to the foreign exchange crisis of the 1990s, it had to farm-out some of its stake to BP. OVL has a 45% stake in Block 06.1, where the balance 20% is with PetroVietnam.

 

The Nam Con Son project's upstream part is Block 06.1, located 370km South?"East of Vung Tau on the southern Vietnamese coast. The 955 sq km block holds the Lan Tay and Lan To gas fields.

 

OVL has so far invested $217 million on the gas fields and has government approval to invest up to $377.46 million.