India to make claim on BP's stake inVietnam
PSU oil majors eye BP's stake in Vietnam gas project
2 offshore fields, pipeline and power project up for grabs; Deora in Hanoi.
With BP Plc likely to exit its hydrocarbon business in Vietnam, Indian public sector companies — ONGC, GAIL (India), Indian Oil Corporation, and Oil India — have combined forces to acquire the British firm's stake in Nam Con Son gas project. The buzz is that following the Gulf of Mexico incident, BP, which is said to be in need of resources, is looking at divesting its stake from its project in Vietnam that includes upstream and midstream units as also a power project. The project cost is estimated to be close to $1.3 billion. An Indian delegation led by the Petroleum Minister, Mr. Marla Debora, is in Hanoi to make a claim on BP's stake in two offshore gas fields, a pipeline and power project called the ‘Nam Con Son gas project'.
Mr. Debora is meeting the Prime Minister of Vietnam to discuss the investment proposals. The Indian side is also meeting the officials of PetroVietnam, the national oil company. The Petroleum Minister told Business Line that “it is a great opportunity for us. We will talk to them.”Other firms such as China's CNOOC and Sinopec as well as Thailand's PTTEP could also be interested in BP's stake in the Vietnam project.ONGC Videsh Ltd (OVL), the overseas investment arm of ONGC, would like to increase its stake in the gas producing asset, where it is a partner with BP and PetroVietnam.OVL has 45 per cent equity, BP 35 per cent (operator), and remaining is with PetroVietnam. Indian Oil Corporation will be looking at the 720-MW power project in which BP has a stake. GAIL (India) is exploring the possibility of acquiring BP's stake in the 376-km pipeline.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.
The Petroleum Secretary, Mr. S. Sundareshan, said, “There are reasonable expectations that BP would like to exit its projects in Vietnam. We would like to lay our claim on the projects. It is an opportunity which we would not like to let go off. It is a producing block, which initially was acquired by ONGC Videsh Ltd and farmed out.”OVL has been working in Vietnam since 1988 when it signed the production sharing agreement for Block 06.1, which is the upstream part of Nam Con Son project. The consortium of OVL, BP and PetroVietnam produces about 12-14 mscmd supporting about 30 per cent of power generation capacity of Vietnam. In fact, given the importance of the project the Government of Vietnam has declared it as one of the projects of national importance. The Government has approved capital investment of about $378 million by OVL in the project. Out of this OVL has already spent $217 million in the project. OVL recouped all its investment in the project in 2006 and currently earns $35-40 million of net revenues.
….Richa Mishra…..Hanoi, July 21……..from the pages of THE HINDU BUSINESS LINE newspaper.
