With BP Plc looking at selling interest in some fields to fund its the Gulf of Mexico oil spill liability, India is pitching for buying the British energy giant’s stake in the $ 1.3 billion Nam Con Son gas project in Vietnam.
Minister of Petroleum & Natural Gas Murli Deora flew into the Vietnamese Capital this morning with heads of bluechip Indian oil firms to lay a claim with Hanoi on BP’s stake in two offshore gas fields, a pipeline and power project — together referred as Nam Con Son, Vietnam’s largest gas project.
“This is a great opportunity for us. The gas fields were originally allocated to us but due to foreign exchange crisis of 1990s, we had to farm—out (give away) some stake to BP. We will like to get back that stake,” Deora said ahead of his meetings with Vietnamese Prime Minister Nguyen Tan Dung and Government—run PetroVietnam.
BP is considering selling fields in Colombia, Venezuela and Vietnam in order to meet the $ 20 billion clean-up bill of the worst U.S. spill. It had in June announced a $ 10 billion asset sale programme to pay the costs of compensating victims of the Gulf of Mexico oil spill caused by the blowout of the Macondo well in April.
China’s CNOOC and Sinopec, as well as Thailand’s PTTEP may also be interested in BP’s stake in the Vietnam project.
ONGC Videsh, the overseas arm of state-run Oil and Natural Gas Corporation, already has 45 per cent stake in the offshore gas fields where BP has 35 per cent and the balance is with PetroVietnam.
A 370-km pipeline ships the gas produced from the fields to onshore power plants. BP has 32.33 per cent stake in the $ 565 million pipeline where its other partners are ConocoPhillips (16.7 per cent) and Petrovietnam (51 per cent).
The gas produced from the fields is supplied to a 720 MW, $ 412 million power plant where BP, NI of Japan and Semb Corp of Singapore have 33.3 per cent stake each.
Oil Secretary S. Sundareshan said India is interested in taking over BP’s stake in all the segments of the Nam Con Son project — the gas fields, pipeline and the power plant.
While OVL along with state—owned Oil India Ltd may takeover BP stake in the gas fields, gas utility GAIL India was interested in the British energy giant’s stake in the pipeline. GAIL and refiner Indian Oil Corp (IOC) can together manage the power plants.
Nam Con Son project’s upstream part is the Block 06.1, located 370 km south—east of Vung Tau on the southern Vietnamese coast. The 955 sq km block has Lan Tay and Lan Do gas fields. Lan Tay currently produces around 14 million standard cubic meters per day of gas while Lan To is being developed currently.
OVL recouped all its investment in the project in 2006 and currently earns $ 35—40 million of net revenues, officials said.
OVL has so far invested USD 217 million in the gas fields and has government approval to invest up to $ 377.46 million.
ONGC Chairman and Managing Director R. S. Sharma, OVL Managing Director R. S. Butola, GAIL Chairman and Managing Director B. C. Tripathi, OIL Chairman and Managing Director N. M. Borah and IOC Director (Refineries) B. N. Bankapur are part of the high-level delegation Mr. Deora is leading.
“There are reasonable expectations that BP may exit its project in Vietnam. We will like to put on record our claim (on this),” Mr. Sundareshan said.
If Nam Con Son was put on the auction block, Asian interest would be strong, especially from Thailand and India, who have regional ambitions but often play second—fiddle to China’s outbound M&A dealmaking prowess.
Chinese oil majors could 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.
