May even revive possible ‘farming in’ opportunity in KG-D6
BP and Reliance Industries (RIL) will set the ball rolling on divestment and joint venture opportunities between the two companies. BP Chairman Carl-Henric Svanberg and newly-appointed CEO Robert Dudley will meet Mukesh Ambani and other top RIL officials when the two come visiting on October 4.
The top BP executives will also call on senior oil ministry officials and industry professionals.
BP is expected to discuss RIL's interest in its exploration assets in North Africa, downstream assets in West and South Africa and its petrochemical operations in Vietnam (which BP is looking to exit). BP and RIL may even revive their talks of a possible “farming in” opportunity in RIL's flagship KG-D6 oilfield, according to sources familiar with the matter.
RIL had earlier appointed Goldman Sachs to explore possible joint ventures in its prime gas block by divesting a 10 per cent stake. The joint venture partner was to bring in deep-water expertise to share the exploration risks.
$30-bn assets on sale
BP, which faced the worst oil spill in history in the Gulf of Mexico off the US east coast, has had to cough up $30 billion to seal the wells, apart from compensating for environmental damages. This made BP put on the block assets worth a similar $30 billion around the globe.
Its chief executive, Tony Hayward, resigned in July, with the company reporting a $17-billion second-quarter net loss.
While a BP spokesperson said Dudley’s visit to India could be a brief one as he is taking over shortly, an RIL executive said they would definitely be meeting Dudley and “discuss business”.
RIL and Essar were among a dozen companies, including PetroSA, who were in the race to acquire BP’s retail assets in Africa. These include retail outlets, terminals and aviation turbine fuel (ATF) facilities in at least four countries in Africa. BP controls as much as 70-80 per cent of the ATF market in a few African countries.
Similarly, BP has been looking at roping in some partners for its exploration and production (E&P) assets in North Africa, including Libya and Egypt. In July, BP divested its Western Desert and East Badr-El-din exploration concession in Egypt to Apache, along with several such agreements in US and Canada.
US assets on the block, too
In addition to African assets, BP also plans to sell several of its US assets. So, at a time when RIL is increasing its acreage, especially in the shale gas domain in the US, next week's meeting is likely to touch upon these prospects as well. BP's recent round of divestment include prospects in New Mexico and Permian Basin in Texas — states where RIL is already active.
State-run Oil and Natural Gas Corporation's (ONGC) overseas arm, ONGC Videsh Limited (OVL), is also in the race to buy out BP's 35 per cent stake in the $1.3-billion Nam Con Son gas project in Vietnam, which has two offshore gas fields, a pipeline and a power project. OVL already owns a 45 per cent interest in the project, while the remaining is part owned by Vietnamese state-owned PetroVietnam.
Oil Secretary S Sundareshan had early this month said ONGC will be finishing the valuation process of BP's gas project in a few weeks and once that is finalised, it will make "an offer in conjunction with PetroVietnam”.
"Negotiations are going on... Officials from OVL have been there twice. The discussion is going on in a very, very positive way," Sundareshan had said in Mumbai.
