Malaysia's SapuraKencana Petroleum Berhad, an integrated oil and gas services and solutions provider with operating interest in the exploration and production sector, terminated plans to acquire petroleum assets in Vietnam from the upstream arm of the country's national oil company Petroliam Nasional Berhad (PETRONAS), it announced in a filing with stock exchange Bursa Malaysia Friday.
"The conditional sale and purchase agreements (SPA) on the Proposed Transaction have been terminated by the parties by mutual agreement in accordance with the terms of the SPA," the firm indicated in the filing regarding the transaction with PETRONAS Carigali Sdn Bhd. SapuraKencana did not reveal the reason for not proceeding with the plan to acquire the Vietnamese oil and gas assets, which according to Malaysian daily The Star was scheduled to be completed by the end of this month.
The steep decline in global oil prices, which The Star indicated fell by more than half since the transaction was signed, could have been a factor contributing to the cancellation of the acquisition by SapuraKencana. Global benchmark Brent crude oil futures settled at $32.18 a barrel Friday, down 59.4 percent from $79.33 a barrel on Nov. 20, 2014, when the SapuraKencana-PETRONAS Carigali agreement was signed in November 2014. At that time, SapuraKencana had signed the agreement to purchase PETRONAS Carigali's entire stake in three blocks offshore southern Vietnam for $400 million following an international bidding process.
The company indicated then that the upstream acquisition would boost its presence in Vietnam by adding exploration and production operations to its existing service operations. The transaction would also add to SapuraKencana's reserves and resource base and increases its oil production to offset the natural decline from other currently producing assets, including Malaysian upstream assets it acquired from Newfield Exploration Co. in October 2013 for $898 million.
The three shallow water upstream assets are Blocks 01/97 & 02/97, Blocks 10 & 11.1 and Block 46-CN. PETRONAS Carigali has a 50 percent stake in Block 01/97 & 02/97 in the Cuu Long Basin, 40 percent interest in Block 10 & 11.1 in the Nam Con Son Basin and 36.85 percent interest in Block 46-Cai Nuoc in the Malay-Tho Chu Basin.
