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BP has put up for sale its 50 percent stake in Chinese SECCO, a joint venture with local energy major Sinopec, eyeing revenues of US$2-3 billion, sources close to the deal told Reuters.
SECOO is the largest refinery specializing in petrochemicals – propylene and ethylene – in the country and cost US$2.7 billion to build. It’s also BP’s largest single holding in Asia’s largest economy.
The sale, according to the sources, is part of efforts on the part of the supermajor to exit projects where it doesn’t have majority control and pile up some cash. Prospective buyers include companies from Europe, Japan, South Korea, and Taiwan, the sources said.
BP has already hired an investment bank to take care of handling the sale, and although Sinopec has the right of first refusal, it’s unlikely to put a spoke in the wheel of BP’s divestment plans as it has enough problems to deal with of its own. Chief among these is an ongoing large-scale anti-corruption investigation in the oil industry, launched by President Xi Jinping last year.
BP reported in late July a nosedive in its net profits to US$720 million for the second quarter of 2016, from US$1.3 billion in the same period of 2015, falling short of analyst expectations. The result was affected by a US$5.2-billion pre-tax charge for the Deepwater Horizon disaster, which brings the total pre-tax charge for the 2010 rig explosion to US$61.6 billion. The latest charge includes all material liabilities BP has estimated regarding the incident.
BP’s chief executive Bob Dudley said at the presentation of the Q2 results that the group expected the environment to continue to be challenging. BP, however, has a pipeline of new projects that are expected to add 500,000 boepd of new production capacity by the end of 2017.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.