BP PLC is teaming up with Chevron Corp. to bid for a South China Sea exploration block, a person familiar with the matter said, signaling the U.K. major’s failure to stop a leaking Gulf of Mexico oil well isn’t deterring rival producers from choosing it as a partner on deepwater projects.
Chevron will own a 60% stake in the block and act as operator, while BP will hold the remaining interest, the person said.
Cnooc Ltd., the listed unit of China National Offshore Oil Corp., has the right to take a 51% stake in the block if the companies make a commercial oil or natural gas discovery.
The deal is currently awaiting approval by China’s Ministry of Commerce, the person added, without disclosing financial terms. It isn’t known if Cnooc will exercise pre-emption rights on the asset.
Although the person didn’t identify the block, a China-based industry official said Oklahoma City-based Devon Energy Corp. has selected BP and Chevron as preferred buyers for block 42/05.
Water depths in the block—located around 250 kilometers south of Hong Kong—range from 198 meters to more than 1,980 meters across an area spanning nearly 7,000 square kilometers.
Spokesmen for all companies involved in the deal declined to comment. The Ministry of Commerce declined to disclose information on the proposed deal.
BP’s involvement in the bidding shows its appetite for deepwater drilling still holds, despite the damage to its reputation due to the thousands of barrels leaking into the U.S. Gulf of Mexico since April when a drilling rig exploded and sank.
Devon is selling all its China assets as part of a broader pullout from offshore and international oil and gas operations to focus on its onshore assets in North America.
Earlier this month, it completed the $515 million sale of its 24.5% interest in a producing shallow-water oil block in the South China Sea to Cnooc.
Separately, Chevron is bidding on its own for Devon’s two other South China Sea assets—block 53/30 and block 64/18—and is the front-runner for a deal, the industry official said.
