Chinese private-sector firm Brightoil has reached a deal to sell its crude storage and port facilities in Zhoushan to state-owned Yantian Port, helping raise cash to pay down its debts.

The deal covers a 90 percent stake in Brightoil’s Hong Kong unit, which has full ownership of a 19.9mn bl tank farm at Zhoushan on China’s east coast and holds a 55 percent stake in a nearby crude terminal and 2m bl very large crude carrier (VLCC) berth.

The assets are valued at $900mn, including Yn2.59bn of equity and Yn2.5bn of construction costs. Brightoil will pay for any construction expenses that exceed that amount.

Brightoil and Yantian Port, which is based in the southern Chinese city of Shenzhen, signed a non-binding agreement on the asset sale in January and have been in talks on a final deal since then.

Brightoil said the cash it receives from the transaction will support its debt restructuring efforts. It plans to focus on upstream oil and gas operations after divesting the storage and port assets.

Construction of the Zhoushan assets was around 80 percent complete before Brightoil was hit by a cash flow crisis in 2016-17. Construction will restart after Brightoil receives financing from Yantian Port, but the timeline to resume work is not yet confirmed.

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14th December 2020