KARACHI, Dec 14: British Petroleum (BP) announced on Tuesday it had entered into an agreement to sell almost all of its exploration and production assets in Pakistan to United Energy Group Limited (UEG) for a total cash consideration of $775 million.

UEG - an unlisted company - would pay BP a total of $775 million in cash for assets that comprise nine producing and exploration blocks in Sindh and four offshore exploration blocks in the Arabian Sea.

The assets are held by three associates: BP Pakistan Exploration and Production Inc., BP Pakistan (Badin) Inc. and BP Exploration Alpha Ltd.

The company expects transaction to be completed in the first half of 2011, “subject to closing conditions, including the receipt of all necessary governmental and regulatory approvals”.

Earlier in the day, Oil and Gas Development Company Limited (OGDCL) notified to the stock exchanges that the joint bid by Pakistan Petroleum Limited (PPL) and OGDCL was no more under consideration.

Company secretary at OGDCL Cram Ali Aziz disclosed to the bourse: “BP International Ltd. after considering the final offer submitted jointly by PPL and OGDCL has decided not to engage in further discussions or negotiations with us regarding the proposed sale of BP Pakistan upstream interests.”

Already a 12 per cent stakeholder in BP, OGDCL, the country’s biggest listed firm, had made a joint bid with PPL for BP assets on Dec 6 -- the last day for submitting the bid documents.

The OGDC-PPL duo did not, however, disclose the price they had offered, but analysts had put the cost of assets figure at around $690 million. The buyers, as such, seem to be going into acquisition at considerable premium to the consensus fair value of BP Pakistan assets.

Under the terms of the agreement with UEG, the prospective buyer is required to pay BP a cash deposit of $100 million with the balance of the proceeds due on completion of the sale.

The company said in a written statement that the sale of those interests in Pakistan was part of the BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011.

Market watchers commented that much of the global asset sale was aimed at raising cash to pay for its Gulf of Mexico oil spill.

Before the agreement to sell those assets in Pakistan, BP had concluded agreements (globally) in the amount, totaling approximately $21 billion.

Bob Dudley, the BP group CEO was quoted to have said: “Today’s agreement is further evidence of the rapid progress BP has made towards the divestment target we set out last summer. We now have agreements in place to secure the majority of our divestment target.”

He further said, “We are continuing to identify further assets that may be strategically more valuable to others than to BP as we complete the programme.”

The company mentioned that current net production of BP Pakistan was about 35,000 barrels of oil equivalent a day (boed). Gross oil production was around 10,000 bpd, while gas production was approximately 200 million standard cubic feet a day.

Analysts at AHL Research observed that the BP asset buyer-United Energy Group Limited - is a listed company on the main board of Hong Kong Stock Exchange.

The company is in investment holding business and principally engaged in upstream oil and natural gas business, including exploration, development, production of crude oil and natural gas.

UEG also provides patented technologies supporting services to oilfields and property investment and management in China.