ONGC Videsh (OVL) has lost out to Russia’s TNK-BP in its bid for 35

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per cent stake in British Petroleum’s assets in south Vietnam, valued at $1.8 billion.

BP announced on Monday that it would sell its upstream businesses and associated interests in Vene-zuela and Vietnam to Russia’s TNK-BP. The sale is part of BP’s plans unveiled in July 2010 to mobilise $30 billion by the end 2011 to meet its financial obligations relating to oil spill in the Gulf of Mexico.

BP and the AAR Consortium comprising Alfa Group, Access Industries and Renova own TNK-BP, Russia’s third largest oil company, equally.

TNK-BP has agreed to pay BP $1.8 billion in cash, subject to certain post-closing adjustments. "Under the terms of the agreements, TNK-BP will pay BP a total deposit of $1.0 billion on October 29, with the balance of payment due on completion of the sales. Subject to regulatory and other third party approvals, and other customary conditions, the parties anticipate completing both sales in the first half of 2011," BP said in its statement on Monday.

OVL, with 45 per cent participating interest, BP, having 35 per cent, and PetroVietnam, a Vietnamese government entity with 20 per cent interest, developed the Lan Tay field in block 06.1 of Vietnam.

When Financial Chronicle contacted for his reaction, oil secretary S Sundareshan said “No comments,” ONGC group chairman RS Sharma said, “I am not aware of any development. I am out of the town.”

This is the same block in which ONGC’s overseas subsidiary had sold a stake to BP in the early ‘90s as it did not have $7,000 (about Rs 1.12 lakh at an exchange rate of Rs 16 per dollar) to buy critical spares for rigs to explore the gas asset owing to a balance of payments crisis when Chandrasekhar was heading the government.

Soon after BP revealed its plan to sell its stake in Vietnamese assets, India made a strategic push to acquire them. Petroleum minister Murli Deora along with top brass of all state-owned oil companies visited Vietnam in July this year. During the visit, Deora discussed with Vietnamese Prime Minister Nguyen Tan Dung about the deal. India also proposed to joint hands with PetroVietnam to acquite BP's stake.

Moreover, BP's new chief executive officer, Bob Dudley visited India early this month. Dudley is learnt to have met Deora during his stay in India. "They (ONGC) are making an evaluation of the value of BP's assets, and once that is finalized they will make an offer in conjunction with Petrovietnam," Oil Secretary S Sundareshan told newsmen on September 11.

OVL has interests in three blocks in Vietnam -- 06.1, 127 and 128. The exploration licence for block 06.1 was acquired by OVL in 1988. Later BP and PetroVietnam were brought in as partners.

In the 06.1 block, the Lan Tay field started commercial production in January 2003. During 2009-10, OVL’s share of production from the project was 1.967 billion cubic metres of gas and 0.042 MMT of condensate. Lan Do field in Block is presently under development with production expected in 2012. OVL’s share of the development expenditure was nearly $230 million till March 31, 2010.

The blocks 127 and 128, fully owned by OVL, are not producing any oil or gas at the moment.