Oil and gas sector: Pakistan Petroleum considering buying out Irish firm’s Pakistani assets

Oil, gas explorer to conduct due diligence and submit bid by mid-December.

ISLAMABAD: Amid financial crunch due to circular debt, Pakistan Petroleum Limited (PPL) – the country’s second largest oil and gas explorer – has decided to buy out assets of Ireland-based private group Tullow Oil located in Pakistan and Bangladesh.

Earlier, PPL had also expressed interest in acquiring assets of MND Exploration and Production in Pakistan and Yemen through share purchases. MND – a wholly-owned London-based subsidiary of KKCG SE – one of the largest privately owned groups in the Czech Republic. Previously, PPL had also bid to acquire Pakistani assets of British Petroleum (BP), which got rejected.

BP and Malaysian-based firm Petronas have already wrapped up their operations in Pakistan and Tullow Oil is the third foreign firm seeking to liquidate its assets and leave the country.

PPL has been expanding its operations domestically and globally as it won exploration blocks in Iraq earlier, where it will invest $100 million.

Sources had also expressed concerns that gas companies and oil refineries have not yet paid PPL the outstanding amount of Rs56.4 billion, which may lead the company to default. “We are facing problems in operation due to the prevailing circular debt issue,” sources in PPL said.



Tullow adopted a two-stage process for divestiture. In the first stage, PPL was selected as a preferred buyer and allowed to carry out further due diligence before submitting the firm a binding offer by mid-December.

According to PPL officials, the company had appointed consultants to evaluate Tullow Oil’s assets in Pakistan and Bangladesh, determine hydrocarbon potential and possible upside in each block. Based on the diligence reports, the advisers will recommend binding values to bid for purchase of entire share the subsidiaries.

Sources said that the Ministry of Petroleum and Natural Resources had already moved a summary to the Economic Coordination Committee (ECC) seeking approval for authorising PPL to submit bid for Tullow Oil’s Pakistani and Bangladeshi assets in its next meeting.

Published in The Express Tribune, December 8^th, 2012.