BP Plugs Spill Bill With Gas Deal

NEW YORK ( TheStreet) -- BP ( BP) announced a sale Thursday of its natural gas liquids business in Canada to Plains All American Pipeline ( PAA) for $1.67 billion.

The deal may be a plug to the $40 billion in claims connected to its 2010 oil spill in the U.S. Gulf of Mexico. BP, which recently said it would sell $45 billion of upstream and downstream assets to meet costs related to the spill, has recently stumbled in sales of other businesses.

Earlier in November, a deal to sell BP's majority stake in an Argentinean oil venture called Pan American Energy for $7.1 billion fell through when its partners Bridas and CNOOC ( CEO) of China objected to negotiations. That deal would have been its largest post-spill asset sale.

With Thursday's natural gas sale to Plains, BP may be back on track in cutting deals to help it pay spill victims. The company is also looking to sell refineries in Texas as part of its asset sale plan.

"Canada remains an important part of our portfolio of growth opportunities to meet North America's energy needs," said BP's chief executive Robert Dudley in a statement. Dudley replaced former-CEO Tony Hayward in the aftermath of the spill and announced in July 2010 that the company would look to sell $30 billion worth of assets. That number has since been raised.

Since June 2010, BP has announced over $17.5 billion in assets, with just over $10 billion in sales coming from oil exploration and production assets, according to data compiled by Bloomberg. Thursday's deal signals that increasingly, the company may look to divest downstream operations like pipelines and refineries.

In July 2010, BP announced its largest post-spill divestitures, selling over $6 billion in U.S. and Canadian oil and gas assets to Apache ( APC). As it stands, Thursday's pipeline sale to Plains is its biggest single downstream sale yet and its fifth biggest post-Macondo divestiture, according to Bloomberg data.

"BP's Canadian NGL business is an asset-rich platform that significantly expands our LPG asset footprint," said Greg L. Armstrong Chief Executive of Plains All American in a statement.

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