BP Plc sold its interest in Kazakhstan's Tengiz oilfield and the Caspian Pipeline Consortium to OAO Lukoil for $1.6 billion in cash, exiting the former Soviet republic to focus on areas such as Russia and Azerbaijan, Bloomberg reported.
Lukoil, Russia's largest non-state oil producer, signaled interest last year in buying BP out of their Lukarco BV joint venture, owner of a 12.5 percent stake in CPC and a 5 percent holding in TengizChevroil LLP, Kazakhstan's biggest crude producer.
Europe's second-largest oil producer is leaving Kazakhstan at the same time other oil companies are ramping up production in the Central Asian Republic. Chevron Corp., Eni SpA and BG Group Plc are set to expand projects in Kazakhstan, which holds 3.2 percent of global proved reserves.
"It's as good a time as any to get out and use the cash elsewhere, especially with the good news from the U.S. Gulf of Mexico find," said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh. "It makes a lot of sense. If you have a finger in too many pies, you can lose the focus on returns."
BP said it would receive the payment in three instalments over the next two years, while a $43 million loan would also be repaid to it by Lukarco.
"We wish CPC every success in achieving the planned expansion of the pipeline, which is important to Kazakhstan and Russia," David Peattie, BP's head of Russia and Kazakhstan, said in a statement.
BP was "blocking" a decision to expand the CPC, Lukoil Chief Executive Officer Vagit Alekperov said in November. The venture plans to expand Kazakhstan's main export link to world markets, almost doubling capacity to 1.3 million barrels of oil a day.
The Chevron-led CPC operates the oil-export pipeline, which carries Kazakh crude to a Black Sea port for shipment overseas. In April KazMunaiGaz National Co., Kazakhstan's state energy producer, also agreed to pay $250 million to buy BP out of a venture that part-owned the CPC.
BP has focused its attention increasingly on other countries in the region. The London-based company is one of the largest foreign investors in Russia and its TNK-BP joint venture is the country's third-largest oil producer, generating more than $25 billion of net income and distributing more than $20 billion in dividends since being set up in 2003.
Together with partners, BP has invested more than $20 billion to tap Caspian Sea oil fields in Azerbaijan and is set to increase exports from the region to more than 1 million barrels of crude a day.
BP is targeting higher output this year after boosting operations in the Gulf of Mexico, where it's already the largest producer. In September, BP announced an oil discovery at the Tiber Prospect in the region.
In Iraq, BP won a contract to develop the southern Rumaila license in June, along with China National Petroleum Corp. The two companies plan to invest about $15 billion over the 20-year contract, as they aim to turn it into the world's second-largest producing oilfield.