The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
BP Plc will sell a stake in an Omani gas block to Thailand’s national energy firm for $2.6 billion, part of a push to divest billions of dollars of assets and focus more on renewable energy.
PTT Exploration and Production Public Co Ltd has agreed to pay the sum for 20% of Block 61, according to statements from both companies on Monday.
The deal should help BP deliver on its goal of selling $25 billion of assets by 2025 to ease its debt burden. Like other oil majors, it must contend with the demand for crude gutted by the coronavirus. The company has pledged to eliminate most of its greenhouse gas emissions over the coming decades.
In September, BP cut its dividend for the first time in a decade, and its share price plunged to a 25-year low after CEO Bernard Looney announced a shift toward greener energy.
The price of the stake
sale is “attractive†compared with historical transactions, analysts at Bernstein including Oswald Clint wrote in a research note.
The sale reinforces their view that BP will start again to buy back shares — a step the company has committed to taking once it trims debt to $35 billion — as early as mid-year. Block 61 is BP’s biggest asset in Oman and has a combined daily production capacity of 1.5 billion cubic feet of gas and more than 65,000 barrels of condensate, a light form of oil, according to the London-based company.
BP began talks with potential buyers in 2020. The London-based company expects the deal to close this year, after which it will remain the block’s operator and its biggest shareholder with 40% ownership.
Of the remainder, Omani state-run firm OQ will hold 30%; PTTEP, 20%; and Malaysia’s Petronas Nasional Bhd., 10%. Petronas bought its stake from OQ in 2018.
PTTEP already has investments in Oman, including stakes in Block 6 and Oman’s liquefied natural gas company. Block 61 has been
developed in two phases: Khazzan, which began production in 2017, and Ghazeer, which started operating in October. The block can meet around 35% of Oman’s gas demand, BP said. The concession area contains the largest tight-gas development in the Middle East, the company said.
Khazzan and Ghazeer rely on hydraulic fracturing to boost output, the method that kicked off the US
shale boom but is rarely used elsewhere.