British oil and gas giant BP has agreed to sell its 34.3 per cent stake in the Yacheng gas field to Kuwait Foreign Petroleum Exploration Company (KUFPEC). The gas field, located in the South China Sea, has been sold for a sum of USD 308 million.
The field supplies natural gas to Castle Peak Company Limited in Hong Kong for power generation via a 780km pipeline. Natural gas, condensate and LPG are also sold to customers on Hainan Island. In 2010 and 2012, BP also won interests to explore gas reserves in the deepwater blocks of South China Sea. These blocks are currently in the exploration phase.
The move comes as part of BP’s business strategy to continue its divestment from different markets. According to Chen Liming, President BP China, “BP remains committed to working with China to contribute its deep expertise and oil and gas supply options in this important emerging market”. Since 2010, BP has been making global divestments to optimize its portfolio. Including this sale, the value of total divestments has reached USD 37.8 billion.
The sale is yet to be approved by regulators, CNOOC and other third parties. The deal is expected to be finalized by the second half of 2013. After completion of the agreement, KUFPEC will own a stake of hold 49 per cent in the Yacheng gas field. CNOOC will have a majority 51 per cent interest in the business.
BP has also been in recent news as some analysts question its ability to maintain a major role in the regional oil industry. It has been reported that the company was excluded from bidding to run the biggest onshore oil fields in UAE. Britain’s political stance on Arab Spring and warmer ties with the fast emerging Asian economies are feeding these speculations. The UAE, which plans to invest an estimated USD 60 billion over the next five years in its oil industry, is seeking greater partnerships from foreign partners.