UPDATE: Pakistan May Consider Buying BP's Assets In Country

23rd Jul 2010 11:38

(Adds details, comments, context) By Gurdeep Singh Of DOW JONES NEWSWIRES SINGAPORE (Dow Jones)--Pakistan's government could make a bid for BP PLC's (BP) assets in the country if the oil major decides to sell them as part of its global campaign to raise money to clean up the Gulf of Mexico oil spill and pay for damages, the head of the country's upstream regulator said Friday. The U.K. oil giant, which has already spent about $4 billion on the spill and has agreed to pay $20 billion for a cleanup and compensation fund, has informally informed the government of Pakistan of a possible sale of its assets in the country, but is yet to seek a formal approval from the government, Naeem Malik, head of the Directorate-General of Petroleum Concessions, told Dow Jones Newswires. BP, which has a substantial presence in Pakistan's oil and gas sector including budding offshore exploration, has yet to decide whether it wants to sell its stakes in individual assets or the entire business as a whole, Malik said. "Instead of these assets going to others, we think why not the government or our public sector companies buy them? Of course, we have to see the financial costs first." It isn't clear what BP's business in the country is worth, but the company produces about 250 million cubic feet of gas a day and 14,000 barrels a day of crude oil. The government could buy BP's assets via its state-run oil companies, Malik said. BP earlier agreed to sell its oil and gas assets in North America and Egypt for $7 billion to Apache Corp. (APA), and had decided to sell its stake in the Argentine unit, Pan American Energy, which could be worth $9 billion and is also in talks with Bridas Corp., Dow Jones Newswires said Friday. Malik said the oil ministry would take up the proposal to acquire the company's assets if and when BP decides to seek formal approval. The completion of negotiations and final sale could take as long as a year. "The government of Pakistan can exercise its pre-emptive right to buy out BP's interests, but we have to see how much are they asking. They told us about the possible asset sale only a few days ago, so it will still take us some time to start due diligence." Malik said the government would prefer for a prominent oil major like BP to stay invested in the country but understands that it's going to a difficult phase and has expressed its intentions to evaluate its option to sell the assets. News of BP's possible exit from Pakistan amid country's rising circular debt issues in the energy business have also fueled talk of another major, Chevron (CVX), closing shop in the country. But a Chevron executive Friday termed the reports "baseless." -By Gurdeep Singh, Dow Jones Newswires; 65-6415 4064; [email protected] (END) Dow Jones Newswires July 23, 2010 06:38 ET (10:38 GMT)