Teak, Poui, Samaan sale...

BpTT’s Poui Platform off the east coast.

Prime Minister Patrick Manning speaks with Energy Minister Eric Williams. At right is Robert Riley bpTT’s chairman and and CEO, Guardian File Photos

By Luis Araujo

Government wants local companies to be involved in bpTT’s sale of its offshore Teak, Poui and Samaan assets, Energy Minister Eric Williams said last week Thursday.

“Joint ventures with local companies will be encouraged. We specifically said that,” Williams said in an interview. “Therefore the companies will be told when they come to do their due diligence that we encourage them to speak with local companies.

BpTT announced the sale of the mature TPS fields about two weeks ago. The assets will go out for competitive bid, with a company being chosen probably by the end of the year. The company is retaining its deep drilling rights in the fields, though.

BpTT chairman and CEO Robert Riley, in making the announcement, said the company had decided to focus on gas production. The three fields were also seen as better suited to a company which would have more of an interest in mature acreages.

As part of the sale, the Government will review the bidders. At the announcement, though, Riley would not say whether the Government would have the final say or not. He only added that, he didn’t “think bptt would ever do something that the minister would not.”

Williams didn’t explain last week how far the companies would be “encouraged” but the preference of joint ventures does give a hint about the Government’s direction.

“Basically, we would come to consensus and that process has begun,” he said.

Both bpTT and the Government are in talks about potential companies, both local and foreign.

There has been interest locally since the announcement, with most of the talk centering on what role local companies could play in the sale. The main point, of course, is the price tag—at the possible US$8 to US$12 for oil reserves, prospective companies would need to look at between US$320 million and US$480 million.

The assets have attracted local interest before. Three years ago, a consortium of local companies approached bpTT but were not successful. Now bpTT has taken a different look at TSP and decided to sell, probably encouraged as well by oil prices which have shot through US$50.

Williams, though, is doubtful that any local company could go after TSP by itself.

“I don’t see any local company necessarily going after that whole chunk. I think that there may be people who could raise the capital but then you’re looking at also the operating expense, probably of the order of at least the purchase price or more over a ten-year period,” he said. “We believe that, at the end of the day, we should go after a certain quality of company but that people should be given a fair chance.

“As it is now, there is no preferred company as far as we are aware and there is no intent to exclude anybody but at the same time, you have to make sure that you go after companies who would be capable of maximising the asset.”

15 per cent at stake

Another part of the deal will give the Government a right to take up 15 per cent of TSP and Williams explained that the agreement allows the Government to pick up to two companies within its stake. He didn’t think that the 15 per cent would discourage companies from bidding. “Well, they know that up front,” he said.

Both NGC and Petrotrin have expressed an interest in TSP: NGC on the day of the announcement and Petrotrin a few days later.

Williams said the Government has not yet made a decision on what it will do with its stake.

“We as a Government have to figure what we want to do and how we want to do it,” he said. “We haven’t decided that as yet.”

Williams also did not rule out the possibility of an IPO, another idea that has been floated since the announcement.

“The reason we said the State, at this time and gave a certain timeline, is to allow us to decide but ultimately we don’t see the State directly being the owner of that 15 per cent. We do see the possibility of either state-owned or otherwise,” he said. “It was sufficient for us to negotiate and secure the 15 per cent and with enough time for us to do the analysis.”

Williams said the Government also sought to ensure that the workers on the fields were treated properly. That was something that was negotiated with the company, he explained, adding that, as far as he was concerned, bpTT was dealing adequately with the HR issues.

Workers will be given a severance and under the agreement, the new company must keep them on for at least one year after the sale.

“We are concerned about the workers, the existing employees,” Williams said. “That has to be very carefully managed. These people have given a considerable amount of their time in this particular field and we felt very strongly that their terms and conditions should be no worse than any previous activities that bp would have engaged in. We wanted to ensure that citizens of this country were treated equitably.”