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Chinese state-held giant China National Petroleum Corporation (CNPC) is in advanced talks to buy a 10-percent stake in a giant natural gas field in Oman from BP in a deal that could be worth US$1.5 billion, Bloomberg reported on Thursday, citing people with knowledge of the discussions.
BP, which has had an upstream presence in Oman since 2007, holds 60 percent in the Khazzan natural gas field, one of the Middle East’s most abundant unconventional gas resources, according to the UK-based supermajor.
Production at the field began in 2017, with phase one made up of 200 wells feeding into a two-train central processing facility, with production reaching 1 billion cubic feet of gas per day (bcf/d). In April 2018, BP said it would invest in the development of the second phase of the Khazzan field, Ghazeer, which is expected to be fully up and running in 2021, with production from the entire Khazzan development rising to 1.5 bcf/d.
Last month, Bloomberg reported, quoting sources familiar with the matter, that BP was in early talks to sell 10 percent in the Khazzan natural gas field in order to cut its debt that has been growing since the oil price crash earlier this year.
There are other potentially interested buyers apart from CNPC, according to Bloomberg’s sources.
If the deal with CNPC goes through, BP would get additional proceeds from divestments, while China’s state oil giant will hold yet another prized hydrocarbon asset in the Middle East.
BP got a step closer to its divestment target after announcing last month it had agreed to sell its global petrochemicals business to UK’s Ineos for US$5 billion, as part of its plan to reinvent itself through the energy transition.
The transaction could help the supermajor to achieve its target for US$15 billion in asset divestitures a year ahead of schedule.
“Today’s agreement is another deliberate step in building a bp that can compete and succeed through the energy transition,” chief executive Bernard Looney said in a statement in June.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com