Repsol has signed an agreement with PetroVietnam to transfer to the Asian company its interests in three exploratory blocks in Vietnam that had been blocked for years by pressure from China, including the Ca Rong Do project
Specifically, the Spanish oil company will transmit its 51.75% interests in block 07/03 PSC and 40% in blocks 135-136 / 03 PSC, the company informed the National Securities Market Commission (CNMV).
The group chaired by Antonio Brufau indicated that it foresees that the operation, which is aligned with the objectives of your strategic plan and subject to administrative authorizations, is closed during this year. Likewise, it indicated that the transaction will not have a significant impact on its financial statements.
In this way, Repsol unlocks the conflict it had with PetroVietnam due to the situation of these blocks and lightens its exposure in Vietnam, a country considered risky, since in recent years its activities had been affected by the territorial conflict in the South China Sea.
Likewise, it had already proceeded to provision these assets, so the operation, when it closes, it will have a positive impact for the company.
In March 2018, the oil company received instructions from PetroVietnam so that, for the moment, it would not continue with the execution of the activities scheduled for the Ca Rong Do development project in block 07/03, where it was the operator with that participation of the 52%, due to pressure received from China. Previously, in July 2017, PetroVietnam had asked Repsol to stop drilling activities in other exploratory blocks also located in the South China Sea.
A "FRIENDLY SOLUTION" TO THE CONFLICT
In its financial report for the first half of last year, the oil company already indicated that the scope of the suspension of activities in Vietnam had not yet been determined and stressed that it was working with PetroVietnam "to en Find ways of acting that satisfy the interests of both parties and that allow reaching a friendly solution to this conflict. "
However, with a view to keeping all possible doors open for a satisfactory solution to the conflict, Repsol reported that it had started the arbitration route in defense of its rights, since it considered that it had "solid legal grounds to claim compensation for the damages that could be derived from this situation, as well as good prospects of success, both in the claim and in the recovery of damages. "
TRANSFER OF OTHER ASSETS TO PRIORITIZE VALUE
Last Wednesday, the energy company also received the go-ahead from the Bulgarian government for the transfer of its 30% stake in the marine block '1-21 Han Asparuh', located in Bulgaria in the waters of the Black Sea, to its partners in the project, the French Total and the Austrian OMV.
The Repsol's strategy involves the active management and flexibility of its upstream portfolio (Exploration and Production), in order to prioritize value. In fact, in recent years the group led by Josu Jon Imaz has divested itself of assets in Romania, Angola or Papua New Guinea, among others, within that strategy of leaving countries or assets in which it had lower margins or expectations.
In this same sense, recently the group led by Josu Jon Imaz also decided to abandon a joint venture project, together with the Russian Gazprom and Shell, to explore oil blocks in the Arctic.
Given the current complicated economic environment for Covid-19, the energy company has adopted a Resilience Plan for this year, which includes added reductions of more than 350 million euros in operating expenses and more than 1,000 million in investments, as well as optimizations of working capital of close to 800 million with respect to what was initially budgeted at the beginning of the year.
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