BP expects to reap about $2 billion from exiting Kazakhstan

LONDON (Bloomberg) -- BP Plc expects to reap about $2 billion from the sale of its Kazakh assets, which include a stake in the Caspian pipeline that pumps crude to the Black Sea, as it quits the former Soviet republic.

“We felt our focus could be better spent on Russia and Azerbaijan,” David Peattie, BP’s regional head, said in an interview in London on Thursday. There are “no current plans” to reinvest in Kazakhstan, he said.

Europe’s second-largest oil producer is leaving Kazakhstan at the same time other oil companies are ramping up production in the Central Asian Republic. Chevron Corp., Eni SpA and BG Group Plc are set to expand projects in Kazakhstan, which holds 3.2 percent of global proved reserves.

BP is one of the largest foreign investors in Russia. Its TNK-BP joint venture is the country’s third-largest oil producer, generating more than $25 billion of net income and distributing more than $20 billion in dividends since being set up in 2003.

Together with partners, BP has invested more than $20 billion to tap Caspian Sea oil fields in Azerbaijan and is set to increase exports from the region to more than 1 million barrels of crude a day.

“We can only focus on so many areas in the region,” Peattie said. “We looked at opportunities in the whole region and made our big bets, Azerbaijan and Russia.”

-----------Terms agreed

OAO Lukoil, Russia’s largest non-state oil producer, has agreed to buy BP out of their Lukarco joint venture, owner of a 12.5 percent stake in the Caspian Pipeline Consortium and a 5 percent holding in TengizChevrOil, Kazakhstan’s biggest crude producer.

Lukoil’s Chief Executive Officer Vagit Alekperov said June 4 that he expected to pay BP more than $1.5 billion for assets in Kazakhstan.

“We’ve agreed all of the terms with Lukoil,” Peattie said on Thursday. “It’s going to take some months” for the transaction to be completed as it requires approval from the Kazakh government, he added.

KazMunaiGaz National Co., the state energy producer, in April agreed to pay $250 million to BP for a separate stake in the CPC. The title to the shares has already been handed over to KazMunaiGaz, Peattie said.

“When you add the two together plus some debt that gets repaid, in total it’s around $2 billion for the whole of the exit” from Kazakhstan, Peattie said.

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