Now BP sells its Malaysian chemicals arm to help pay Gulf bills

Published on Tuesday 31 August 2010 22:37

THE fallout from the Gulf of Mexico oil spill continues to be felt at BP, which yesterday announced plans to sell its chemicals businesses in Malaysia.

BP revealed in July that it would sell $32 billion (20.7bn) worth of assets from its worldwide portfolio of business to raise money to cover the costs of clean up, litigation and compensation from the spill.

The oil giant's ethylene and polyethylene interests in Malaysia are to be sold to state oil company Petronas for a total of $363 million.

BP said the deal is the latest in a programme of divestments of "non-core, non-strategic areas of the business".

Sue Rataj, president of BP's global petrochemicals division, said: "Whilst these are attractive businesses with strong domestic and regional markets, BP recognises that Petronas is their natural owner, with various integration opportunities uniquely available to them.

"BP will continue to focus on the development and expansion of our olefins and derivatives business in China, and other large rapidly growing markets, and pursue opportunities in China and India to extend our leading world positions in aromatics and acetyls."

In July, BP announced it was to sell oil and gas assets in Egypt, the United States and Canada to American energy company Apache for $7bn. It has also sold $1.9bn of assets in Colombia.

The company is still looking for a buyer for upstream assets - dealing with oil and gas exploration - in both Vietnam and Pakistan.

BP needs to raise money fast to cover the costs of the Gulf of Mexico spill. Eleven workers died and 17 were injured in the original explosion, with two more deaths during the rescue operation and clean up.

Between 10 April and 15 July, oil escaped from the well at a rate of around 53,000 barrels a day, with a total of more than four million barrels of oil released into the sea before the well was finally capped.

After negotiations with the US government, BP agreed to pay $20bn into a fund that will be used to pay compensation and litigation arising from the accident. The company announced in July that it had spent $3bn on attempts to cap the oil leak.

BP - which has been in Malaysia since the 1960s - still has 850 staff in the country and runs an Asian Business Service Centre in Kuala Lumpur.

Tony Shepherd, an oil analyst at Charles Stanley, said: "BP has to raise around $30bn - but the company has enormous assets all around the world. Some of these assets they can raise very good prices for.

"They will be looking to sell businesses which do not fit with their long-term strategy and see if they can match them up with a potential buyer."

Shepherd said that shares in BP had started to rally since July, when the oil leak was finally capped and the group named Bob Dudley as its new chief executive, who is due to take up his post next month.