British oil giant BP plc, yesterday said that it will sell most of its assets in Pakistan to Hong Kong-based assets investment company United Energy Group (UEG), for $775 million in cash.

The deal knocked out a joint lower bid by Pakistan state owned oil Pakistan Petroleum Ltd (PPL) and Oil and Gas Development Co. Ltd. (OGDCL), the country's biggest listed firm.

The London-based BP had announced in July this year its decision to sell its upstream exploration and production assets in Pakistan as part of its bid to sell $30 billion of assets over 18 months in order to fund the Gulf of Mexico oil spill.

Proven reserves of these assets are 43.1 million barrels of oil equivalent (boe) and net production is about 35,000 boe a day. These assets contribute 14 per cent of Pakistan's total oil production and 6 per cent of its domestic gas production.

BP has not sold its stakes in three unexplored offshore fields, where OGDCL is the operator.

UEG will pay BP a cash deposit of $100 million, with the balance to be paid after all necessary governmental and regulatory approvals are received, which BP expects by the first half of 2011.

It appears that BP has been able to get a fair price for its assets in Pakistan, which is in line with the price it has received for other assets it has sold in Latin and South America, Asia Pacific region, Africa and Europe, that has helped it to raise $21 billion to date.

The purchase by UEG is its first venture in Pakistan, although the company, whose biggest shareholder is Chinese billionaire Zhang Hongwei, has oil and gas operations in mainland China and Indonesia,

Last month, OGDCL and PPL were conducting due diligence and said that they would jointly bid after recommendations by its consulting firm Barclays Plc. (See: Pakistan oil companies eye BP's local assets)

OGDCL, which already holds stakes in BP's oil assets in Pakistan, has the option of right to match UEG's offer for 18 fields in BP's Pakistan assets under pre-emptive rights, while PLL has none.