BUENOS AIRES—BP PLC’s $7.06 billion deal to sell its stake in an Argentine crude-oil producer to a joint venture involving Argentina’s Bridas Energy Holdings Ltd. and China’s Cnooc Ltd. has collapsed, the Argentine and Chinese companies said.
London-based BP agreed last November to sell its 60% stake in Pan American Energy LLC to Cnooc and Bridas, with their pact containing a Nov. 1 completion date. BP said that its counterparties had, as part of the agreement, been responsible for getting Argentine antitrust and Chinese government approvals, but hadn’t been able to achieve this.
The joint venture, Bridas Corp., said in a written statement that it decided to end talks on the sale because of «legal reasons» and because of «the way BP has acted during the transaction.»
David Nicholas, a spokesman for BP, said it «received a letter from Bridas Corp. exercising their right to terminate the share purchase agreement under which it had agreed to purchase BP’s 60% interest» in Pan American Energy. «BP will now be considering all its strategic options regarding PAE,» he said.
«BP is happy to return to long-term ownership of these valuable assets, given the considerable improvement in its own financial strength and circumstances, as well as the improved external trading environment,» Mr. Nicholas added.
BP Chief Executive Bob Dudley said in a phone call with financial analysts on Oct. 25 that the U.K. company «reached that agreement last year at a time when oil prices were lower. It was a time when we actually needed to make some divestments of properties.
«We’re past that point,» Mr. Dudley added. We don’t actually need to make that divestment…if it doesn’t happen, it’s absolutely fine.»
In a separate written statement on Sunday, Cnooc CEO Yang Hua said conditions necessary for the deal’s completion «were not obtained as expected, and Bridas chose to terminate the transaction.» No additional details were given other than that BP had been informed of the decision on Saturday.
The planned deal would have been one of a string a major resources investments by China in Latin America during the past two years.
Bridas denied media reports that cited Argentine political opposition to the deal, saying that both the Argentine and Chinese governments «have always acted positively» regarding the transaction. «Neither the European nor the international financial crisis nor any measures taken in Argentina have had any influence on this decision,» Bridas said.
BP has been selling assets to raise cash to cover the cost of last year’s Deepwater Horizon oil spill in the Gulf of Mexico.
Chinese companies have long been scooping up overseas oil and natural-gas assets, and Cnooc said Sunday it is still looking for additional acquisitions.
Last year China Petroleum & Chemical Corp., or Sinopec, bought a 40% stake in Repsol YPF’s Brazilian upstream operations for $7.1 billion. Sinopec also acquired U.S.-based Occidental Petroleum Corp.’s Argentina subsidiary for $2.45 billion.
Last month, a unit of China Petrochemical Corp. agreed to buy Daylight Energy Ltd., a Canadian oil and natural-gas producer, for 2.2 billion Canadian dollars (US$2.16 billion).
Cnooc and BP had previously said the U.K. company would have to repay a deposit from the joint venture of $3.53 billion if the deal fell through. In event of termination, BP also would have to pay Bridas $700 million, according to a BP statement on Oct. 25.
Bridas said it wouldn’t rule out further talks. «We don’t have any idea how BP is going to react,» Bridas added. «You’d have to ask BP.»
Pan American’s main assets are in Argentina, where it is the second-largest producer of oil and gas. The company also has interests in oil and gas transportation, oil storage and loading, gas distribution and power generation.
Cnooc said that it «will continue to look for overseas opportunities which could add value to our company.»
Cnooc had a high-profile failure on a larger deal back in 2005 when its attempts to buy California-based Unocal Corp. were blocked amid a political uproar in the U.S.
Source: http://online.wsj.com