TNK-BP to Swap Assets with Indian ONGC

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Dec. 29 – Russian oil group TNK-BP may swap some of its assets with Indian state-run explorer Oil & Natural Gas Corp., Mikhail Fridman, the head of TNK-BP said on Monday.

TNK-BP may offer some of its assets to ONGC in order to gain the Indian company’s approval to buy BP Plc’s stake in a Vietnamese project, Interfax said, citing German Khan, a shareholder and executive director at the Russian oil producer, which is half owned by BP.

TNK-BP hasn’t decided what assets to offer to ONGC, which has the right of first refusal to buy BP’s stake after Vietnam Oil & Gas Group, or PetroVietnam, declined its right.

“ONGC is interested in developing its resource base in Russia, while TNK-BP is interested in (the) possibility of financial investments from ONGC,” German Khan told Russian news agency Interfax in an interview.

He said TNK-BP was ready to sell part of its assets to PetroVietnam, Vietnam’s state-owned oil and gas corporation.

On November 15, 2010 Russian Ministry of Energy and the Vietnamese Ministry of Industry and Trade signed a memorandum of understanding allowing TNK-BP to acquire BP’s Vietnamese gas assets.

According to the agreement, PetroVietnam will support TNK-BP’s entry to the Vietnamese oil and gas market through the acquisition of BP’s stake in upstream gas producer Block 6.1 and also will support TNK-BP’s intention to further expand its downstream and upstream business in Vietnam.

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

But the future of the deal depends largely on the position of a third party – the Indian company ONGC.

According to analysts, BP’s assets for sale in Vietnam, which is comprised of stakes in Block 6.1, the Nam Con Son pipeline and the Phu My power generation project, is worth around US$1 billion.

ONGC has a 45 percent share in Block 6.1 in the Nam Con Son basin, off Vietnam’s southeast coast.

On September 20, 2010, TNK-BP signed a contract to supply Russian ESPO crude oil blend to Vietnam. This is the first time ESPO crude oil blend will be delivered to Vietnam. The first 100,000 ton shipment under the new contract is to be delivered in November 2010.

TNK-BP is Russia’s third largest oil company, 50 percent held by BP and 50 percent held by the AAR Consortium (Alfa Group, Access Industries, and Renova).

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