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Algeria May Favor Sonatrach to TNK-BP for BP Assets

Source: Bloomberg 12/17/2010, Location: Africa

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Algeria may favor state-owned Sonatrach over TNK-BP should BP Plc decide to sell its Algerian assets, Russia’s Energy Minister said.

Sonatrach is considering whether to use its right of first refusal over BP’s stake, Sergei Shmatko told reporters in Moscow today. “It appears that Algeria is leaning towards Sonatrach entry into these projects,” he said.

BP has agreed to $21 billion of asset sales, of a planned divestment program of as much as $30 billion, to help cover the cost of the Gulf of Mexico oil spill. Sonatrach’s pre-emption rights may hamper TNK-BP’s overseas expansion drive. The company is a joint venture between BP and a group of Russian billionaires.

Sonatrach is looking at costs and technological challenges to decide if it can develop the Algerian fields that BP may sell on its own, Shmatko said.

BP, based in London, is the largest foreign investor in Algeria, according to the company’s website. In addition to exploration acreage, it operates two gas fields, Salah Gas in the Sahara Desert and Amenas in the southeast of the country, and is a partner in the Rhourde El Baguel oil field.

TNK-BP in October agreed to buy BP stakes in Vietnam and Venezuela for $1.8 billion. TNK-BP Deputy Chief Executive Officer Maxim Barsky said at the time the venture will get the first look at the Algerian assets, which may cost about $3 billion.

“The fields are very risky there,” Shmatko said. “They thought BP technology is able to work; our strong point is that TNK-BP could inherit it in terms of staff and technology.”

BP spokeman Robert Wine declined to comment when contacted by telephone in London. Sonatrach’s press office declined to comment when contacted by telephone.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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