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BP tipped to win auction for Pakistani oil company

BP is a front-runner to win a controlling stake of Pakistan State Oil (PSO) in a deal worth around $600 million (€442 million, £300 million).

BP is bidding for the stake with MerchantBridge, a new London-based investment bank, and is competing with, among others, Petronas, the Malaysian oil and gas giant, and Vitol, the oil marketing company. The Pakistani Government owns 54% of PSO and has hired JPMorgan, the American investment bank, to sell a 51% stake in the group, leaving 3% in government hands. The auction, which set a bid deadline at the end of January, is expected to be completed imminently.

PSO owns two refineries and 3,700 petrol stations across Pakistan. While BP declined to comment, Basil al-Rahim, the managing partner of MerchantBridge, said: “Pakistan’s economy is growing at between 6-7% a year. We take the view that that will continue for the foreseeable future and wish to participate in that growth.” He added: “BP can bring additional operating improvements to the business.” BP and MerchantBridge are competing with Petronas and its financial partner MCB Bank, the second-largest bank in Pakistan.

PSO is the largest oil marketing company in Pakistan, involved in storage, distribution and marketing of petroleum products. It has a 78% share of the black oil market and 57% of the white oil market in Pakistan. BP is already a partner with PSO: together they market BP’s Castrol lubricants brand. Tony Hayward takes over as chief executive at BP from July. In the event that BP is successful in its bid for PSO, formalizing the deal would be one of Hayward’s first investments as head of the oil group. (petrolplaza.com)