KUALA LUMPUR: SapuraKencana Petroleum Bhd has proposed to acquire Petroliam Nasional Bhd’s (Petronas) entire interest in three oil blocks offshore south Vietnam for US$400 million (RM1.34 billion).

News of Petronas’ intention to sell its producing Vietnam oilfields have surfaced since early this year. SapuraKencana won the international bid.

In a filing with Bursa Malaysia yesterday, SapuraKencana said its wholly-owned subsidiaries SapuraKencana Energy Vietnam (Cuu Long) Inc, SapuraKencana Energy Vietnam (Nam Con Son) Inc and SapuraKencana Energy Vietnam (Cai Nuoc) Inc entered into three sales and purchase agreements (SPAs) with Petronas Carigali Vietnam Ltd and Petronas Carigali Overseas Sdn Bhd for the three blocks.

Petronas has a 50% interest in Blocks 01/97 and 02/97 known as the Cuu Long Basin, 40% interest in Blocks 10 and 11.1 called Cai Nuoc and 36.8% interest in Block 46-CN named Nam Con Son Basin. These blocks are located primarily in shallow waters offshore south Vietnam. SapuraKencana is entitled to net revenues from these blocks starting from Jan 1, 2014.

In a statement, SapuraKencana president and group chief executive officer Tan Sri Shahril Shamsuddin said the acquisition of the three blocks marks a significant milestone for SapuraKencana as it further strengthens the group’s presence in Vietnam by adding explorations and production (E&P) operations to its existing service operations.

“The acquisition is in line with the group’s strategy to build a balanced portfolio of E&P assets,” he said, adding that its strategy focuses on balancing exploration, development and production as well as the oil and gas contribution to reserves and resources.

Shahril pointed out that the deal will also provide sustainable growth and visibility on the group’s longer-term income stream.

This article first appeared in The Edge Financial Daily, on November 21, 2014.