Indian oil giants vie for BP assets

Brian Benza
Staff Writer | Friday August 6, 2010 00:00

 

The two companies are bidding to acquire the retail assets and lubricant business of BP in five African countries, including Botswana.

 BP announced early this year that it would be pulling out of five southern African countries, namely, Botswana, Zambia, Malawi, Tanzania and Namibia, as part of a strategic review.

Industry sources say the Botswana government is also studying the possibility of securing BP or Shell's infrastructure for a planned state oil company.

Shell and BP are Botswana's two biggest and oldest petroleum retailers with extensive infrastructure countrywide and lucrative contracts across industry, many of them with government departments.

Indian media this week indicated that both Essar and RIL were likely to place bids in the range of US$400m to US$450m. Business Standard said BP was expecting US$500m for its assets.

 The two companies are also reportedly the only ones bidding for BP's entire portfolio of 220 retail outlets, along with the company's lubricants business. Most other bidders, including local companies, are expected to bid for piecemeal assets.BP plans to sell US$30bn worth of assets over the next 18 months to fund mounting costs of the massive oil spill in the Gulf of Mexico and is likely to be more inclined to sell to someone bidding for the entire assets on the block.

 Essar's Group CE, Prashant Ruia, was quoted by Business Standard as admitting that the group was exploring the opportunity and that it was in the race with a dozen other companies. However, he said it was early in the process and that there were five countries that the Group had to look at.

Industry analysts said for both players, it makes sense to capture the entire value chain, noting that Africa is a growing market and that countries like Botswana are growing as much as BRIC countries.

Essar already has a refinery in Africa and RIL exports nearly 50 percent of their refining capacity of 60 million tonnes.

In an earlier telephone interview with Mmegi, BP Botswana General Manager, Mahube Mpugwa, said though the company, which is the largest oil firm in Botswana, had not set any timeframes for pulling out, it would be a long process that could take up to 18 months.

BSE-listed Engen, which is Botswana's third biggest oil company, has also expressed an intention to take advantage of the opportunity presented by BP's pull out.

Kenya's KenolKobil has also said it was interested in BP Plc's marketing businesses in the five African nations.

Asked how many enquiries BP Botswana had received from potential buyers, Mpugwa said he had received many calls from individuals and companies in Botswana and the southern African region.

'We have received many enquiries,' he said. 'But I have referred all of them to our Acquisitions and Mergers Division in London. They are the ones handling the matter.'