BP Backs Off from Algeria Asset Sales

ALGIERS (Dow Jones Newswires), March 8, 2011

BP has backed off from plans to sell assets in Algeria, the country's energy minister said, a blow to potential Russian buyer TNK-BP Ltd. but a vote of confidence for the nation amid unrest in other parts of North Africa.

The U.K. oil giant's decision to stay put in Algeria contrasts with its decision to suspend some operations and repatriate staff from neighboring Libya, where turmoil has shut more than half of oil output.

The Sunday announcement came after the company's Russian joint venture, TNK-BP, half-owned by BP, said last week it was still interested in buying the assets owned by the British company, the largest foreign oil-and-gas investor in Algeria.

In an interview, Algerian Energy Minister Youcef Yousfi said "BP doesn't want to go. BP has decided to cancel its plan to sell" the assets in the North African nation. BP, which never confirmed plans to sell assets in Algeria, and TNK-BP declined to comment.

The minister said he wasn't given a reason for BP's decision to end the planned sale, which would have involved a large chunk of its Algerian portfolio. But he suggested the oil giant no longer needed the cash for a divestment program launched after the oil spill in the Gulf of Mexico last year.

While confirming its interest in the BP Algerian assets, TNK-BP had cautioned it didn't expect a breakthrough in negotiations soon. Algeria's state energy firm, Sonatrach, had signaled an interest in exercising a right of first refusal to the BP assets.

In Algeria, BP has two large natural-gas projects: In Salah, which covers seven fields in the southern Sahara desert, and In Amenas. BP also participates in the Rhourde El Baguel oil project and is exploring for oil in the Bourarhet block next to In Amenas.

Mr. Yousfi said talks continued for an expansion phase at the Rhourde El Baguel project.

After revolutions toppled regimes in Egypt and Tunisia and threatened the rule of Col. Moammar Gadhafi in Libya, some experts have wondered whether oil supplies could come under threat in the rest of the Middle East and North Africa. But after riots in January were met with economic and political responses, Algeria has been insulated from the sort of turmoil faced by its neighbors to the east.

Copyright (c) 2011 Dow Jones & Company, Inc.


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