LONDON, April 30: A leading UK oil company British Petroleum (BP) has emerged as a front-runner to win a controlling stake of Pakistan State Oil (PSO) in a deal worth around $600 million, reports “The Times.”

According to the paper, BP is bidding for the stake with Merchant Bridge, a new London-based investment bank, and is competing with, among others, Petronas, the Malaysian oil and gas giant, and Vitol, the oil marketing company.

The Pakistani government owns 54 per cent of PSO and has hired JPMorgan, the American investment bank, to sell a 51 per cent stake in the group, leaving 3 per cent in government hands.

The auction, which set a bid deadline at the end of January, is expected to be completed imminently, the paper has further said. PSO owns two refineries and 3,700 petrol stations across Pakistan.

In the year to June 2006, PSO reported sales of Rs353 billion (#2.9 billion), compared with Rs254 billion in 2005. It made a pre tax profit of Rs11.7 billion, up from Rs9.2 billion the year before.

Shares representing 46 per cent of the company are traded on the Karachi stock market.

The paper quoted Basil al-Rahim, the managing partner of Merchant Bridge, as saying: “Pakistan's economy is growing at between 6 and 7 per cent a year. We take the view that that will continue for the foreseeable future and wish to participate in that growth.” He added: “BP can bring additional operating improvements to the business.” BP and Merchant Bridge are competing with Petronas and its financial partner MCB Bank, the second-largest bank in Pakistan.

PSO is the largest oil marketing company in Pakistan, involved in storage, distribution and marketing of petroleum products. It has a 78 per cent share of the black oil market and 57 per cent of the white oil market in Pakistan.

BP is already a partner with PSO: together they market BPs Castrol lubricants brand.—APP