British oil giant
) has inked a sale agreement with Kuwait Foreign Petroleum
Exploration Company (KUFPEC) relating to its 34.3% stake in the
Yacheng gas field in the South China Sea, for $308 million cash.
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BP's decision to divest its Yacheng stake forms part of a broader
program that focuses on high value assets with long-term growth
potential. However, as one of the leading foreign investors in
the Chinese energy sector, BP will carry on investing in both
upstream and downstream areas of China.
The field - commissioned in 1996 - was operated by BP till
) acquired the operatorship of the field in 2004 and will remain
the majority partner post sale with a 51% stake. KUFPEC will hold
the remaining 49% stake.
Situated about 62 miles (100 kilometers) south of Hainan Island
in 295 feet (90 meters) of water, Yacheng 13-1 is the largest
producing natural gas field offshore China. BP received interests
in deepwater blocks 42/05 and 43/11 in the South China Sea in
2010 and 2012, respectively. Currently, exploration work is in
progress in the fields.
The deal - likely to close in the second half of 2013 - is
subject to regulatory, CNOOC and third party approvals.
At present, natural gas from the field is used for power
generation at the Castle Peak Company Limited in Hong Kong and
moved through a 780-kilometre pipeline. The consumers on Hainan
Island receive the remaining natural gas, condensate and LPG.
The oil giant had set a goal to divest around $38 billion worth
of assets by 2013, of which it has contracted to sell assets
valued at nearly $37.8 billion till date. This includes the
closure of a $5.5 billion cash deal with Houston's
Plains Exploration & Production Company
) relating to the divestment of various oil and gas fields in the
deepwater US Gulf of Mexico in November 2012.
BP holds a Zacks #3 Rank, which is equivalent to a Hold rating
for a period of one to three months. Longer term, we maintain our