ONGC keen to buy BP's stake in Vietnam project

ONGC keen to buy BP's stake in Vietnam project

Credit: Reuters/Molly Riley/Files

Wed Jul 21, 2010 6:14pm IST

By Nidhi Verma and Ho Binh Minh

NEW DELHI/DALAT, Vietnam (Reuters) – Indian state-run explorer Oil and Natural Gas Corp(ONGC.BO) wants to buy BP's(BP.L) stake in an offshore Vietnam gas field, as Hanoi stressed BP must give priority to its partners in the sale of its energy assets.

ONGC has a 45 percent share in Block 6.1 in the Nam Con Son basin, off Vietnam's southeast coast, which is operated by BP with a 35 percent stake, ONGC's website shows. The rest is owned by Petrovietnam.

"Yes, we are interested," ONGC head R.S. Sharma said, when asked if his firm was interested in buying BP's stake.

Vietnam's deputy minister of industry and trade Do Huu Hao earlier said BP must give priority to its partners in sales of stakes in energy assets in Vietnam before making offers to outside parties.

A BP spokesman said the company was "exploring divestment options" for its interest in the Nam Con Son gas project, which the London-based firm says is one of Vietnam's largest foreign investment projects.

The interest, which comprises stakes in the Lan Tay and Lan Do gas fields, the Nam Con Son pipeline and the Phu My power generation project, is worth $966 million, analysts at UBS said in a research note on Monday.

BP has kicked off a $10 billion asset sale aimed at raising cash to pay for its Gulf of Mexico oil spill. On Tuesday, it said it planned to sell gas assets in Pakistan and Vietnam worth around $1.7 billion.

BP shares were up 3.2 percent by 1220 GMT in a strong market.

China's CNOOC and Sinopec, as well as Thailand's PTTEP and ONGC(ONGC.BO) were likely to show interest in BP's stake in the project, bankers and analysts who are familiar with the asset had told Reuters last week.

Hao said BP had informally approached Vietnam on the stake sale.

"They need to have a formal letter with a proposal to the Vietnamese government," he said. "After that letter (they) need to discuss with Petrovietnam and partners, Hao told Reuters and domestic media at a meeting of ASEAN energy ministers.

"In principle, priority should be given to sell the stake to partners," he said. "If partners do not buy, then they can sell to outside parties and in case of selling to outside parties, they (BP) will need to seek permission from the Vietnamese government on the supply of bidding documents."

Other stakeholders in the Nam Con Son pipeline include ConocoPhillips and Petrovietnam, while Singapore's Sembcorp Industries and Japan's Kyushu Electric Power also have stakes in the Phu My 3 power plant.

Vietnam's relatively small status as an oil producer and flat production growth over the last five years meant Nam Con Son is unlikely to attract global players such as ExxonMobil and Chevron, some analysts had said.

Analysts say Chinese oil majors could also come up against political opposition in Vietnam, where suspicion of China runs high due to the territorial disputes between the countries in the South China Sea.

BP also plans to sell its upstream assets in Pakistan comprising a number of producing fields and exploration blocks in the southern Sindh province, estimated by UBS to be worth $690 million.

(Writing by Ramthan Hussain, Editing by Anshuman Daga)

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