US oil and gas company Apache Corporation on Monday announced that it will acquire 65 per cent stake in Burrup Holdings Limited, parent company of Burrup Fertilisers Pvt Ltd (BFPL), one of the world’s largest liquid ammonia plant in Western Australia built by industrialist Pankaj Oswal.
Oswal owned 30 per cent of the shares in Burrup Holdings Limited and Radhika Oswal owned 35 per cent shares. The stake was put up for sale by receivers for the Australia and New Zealand (ANZ) Bank, which is trying to recover A$900m in loans.
An ANZ spokesman told Business Standard, “We continue to believe that there are reasonable grounds for a full recovery of our exposure to the Oswals.”
Apache has, however, not revealed the price it intends to pay, but earlier media reports estimate the deal is worth around A$600mn, well below an offer of A$800mn made by Wesfarmers last year.
Norway’s Yara Inter-national ASA, which is a 35 per cent shareholder and customer of the ammonia plant, has until January 31, 2012, to match the offer.
Yara’s vice-president, Corporate Communications, Esben Tuman, told Business Standard, “As a major shareholder Yara is clearly an interested party in the sale process and has certain pre-emptive rights under the BHL Shareholders Agreement. Yara also enjoys rights to pursue a TAN Project with Burrup Holdings. We are comfortable with our situation, and we will review our position in the time to come”.
Apache, which plans to proceed with the development of a technical ammonium nitrate (TAN) plant in the ‘Burrup Peninsula’ of Western Australia, said it was negotiating to sell most of its interest in the TAN project to Orica, an Australia-based global supplier of mining explosives.
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Apache has supplied natural gas to Burrup Fertilisers since the plant commenced production in 2006. With a production capacity of 760,000 metric tonnes annually, the Burrup Fertilisers plant produces 6 per cent of the total world output of tradable ammonia.
Apache's chairman and chief executive officer, G Steven Farris said in a statement, “After a year of significant turmoil surrounding the Burrup plant ownership, Apache decided to make this investment in order to stabilise the project and secure a long-term economically viable market for our natural gas production in Western Australia.
BFPL has a 25-year take-or-pay contract for gas with Apache Energy Ltd, Tap Oil Ltd and Kufpec Australia Pvt Ltd. Oswal had sealed a deal with Apache to provide him with huge quantities of natural gas at what is now a bargain price.
Last week, the Victorian Supreme Court refused an application from Radhika Oswal to block the sale of her 35 per cent share in the company. A spokesman for the Oswals said that they would not be issuing any comment at this stage, but will pursue the court cases. The Oswals have been involved in nearly 15 legal proceedings.