Brightoil Petroleum has sold 90% of the shares in its Hong Kong division, including Zhoushan oil storage and terminal facilities, to Yantian Port Group.
Brightoil Zhoushan oil storage facility has a total capacity of 3.16 million m3, with phase one having a capacity of of 1.94 million m3 and phase two having a capacity of 1.22 million m3. Once complete, the terminal facility will have 13 berths accommodating vessels ranging from 1,000 to 300,000 DWT.
Yantian Port Group will acquire 100% of the equity interest in Brightoil Petroleum Storage (Zhoushan) and 55% of the equity interest in Zhoushan Brightoil Terminal. The companies have agreed a price of RMB 5.89 billion (€740.6 million) for the assets. Brightoil signed the initial non-binding Zhoushan Project Cooperation Framework Agreement with Yantian Port Group on 7 January 2020 and the two sides have now signed a final agreement following negotiations.
The deal includes the funds that will be required for construction of the project. Yantian Port Group will be responsible for any further construction costs, up to a limit of RMB 2.5 billion, with excess deducted from the overall price. The two companies will cooperate on construction.
Yantian Port Group will pay in instalments based on the project’s progress.
Brightoil says that the deal will create a valuable cash income which will help with its debt restructuring and allowing it to improve its assets and business structure. It also means that the company will not need to inject a lot of capital in construction, but still retains a 10% share in the Hong Kong business as an investment. Following the completion of the deal, Brightoil will focus on its upstream oil and gas business.