Sector News

Buyers eye Sinopec's Argentina oil assets in sale worth up to $1 billion: sources

October 16, 2017
Chemical Value Chain

Advisers to China’s Sinopec have offered its oil assets in Argentina to about a dozen potential suitors, three sources familiar with the matter said, as losses and labor headaches prompt Asia’s largest refiner to pull out.

The Argentine oil and gas assets, mainly in the southern province of Santa Cruz, could be worth $750 million to $1 billion, one of the sources said.

That would be less than half the $2.45 billion Sinopec paid in 2010 to buy the Argentine assets from U.S.-based Occidental Petroleum Corp, marking an aggressive drive to diversify its oil sources at the time. (reut.rs/2xtWaYi)

Prospective buyers for the assets – mainly large energy companies from the United States, Europe, Africa and Latin America -include Angola’s state oil company Sonangol and two Russian energy giants, including Rosneft, said two of the sources.

Mexico’s Vista Oil & Gas has also expressed an interest, according to a separate source.

One of the sources said there could be more than 15 prospective suitors.

Argentina’s Corporacion America, which controls energy company Compania General de Combustibles (CGC), decided it was no longer interested after studying some of the assets in Santa Cruz, spokeswoman Carolina Barros told Reuters.

Sinopec is being advised by Scotia Waterous, a unit of Canada’s Bank of Nova Scotia, which focuses on energy deals, two of the sources said.

All the sources declined to be named as the sale plans are confidential.

Sinopec and Sonangol did not respond to requests for comment. Asked about the sale and its interest, Rosneft said it was not able to confirm the information.

Vista, Scotia Waterous and Argentina’s energy ministry declined to comment.

BOOM, BUST

In 2010, when Sinopec bought the Argentine assets, China – the world’s No.2 oil consumer – was scouting for natural resources to feed its surging economy.

Worsening economic conditions and social unrest in Argentina, however, have “weighed” on the operation since then, Sinopec said in September last year.

Argentina’s president, Mauricio Macri, has made attracting energy investment a priority since he took office in 2015. His government said last month it had brokered a deal to calm labor conflicts in Santa Cruz and lower costs.

But two sources said the Sinopec assets would be a tough sell regardless, given labor woes and declining oil output. Sinopec had already considered divesting the investment in 2015, sources told Reuters last year.

“It doesn’t have to be (fast), unless Sinopec is willing to lose a huge amount of money,” said one source, referring to Sinopec’s willingness to accept low bids.

Based on a $60 per barrel crude price, Sinopec suffered losses of $2.5 billion on oil projects in Argentina by the end of 2015, Chinese publication Caixin reported last year, citing an internal audit report.

“Golfo San Jorge, around where the Sinopec assets are located, is an old area,” said a different source familiar with the process.

“The (Santa Cruz) province recently auctioned off four areas, and three were won by locals – ENAP, CGC and YPF. It’s a tough sell, and soon there will be another offshore auction that might further reduce the attractiveness of Sinopec’s wells.”

By Guillermo Parra-Bernal, Julie Zhu and Eliana Raszewski

Source: Reuters

comments closed

Related News

March 25, 2023

Cinven to buy MBCC admixture assets from Sika

Chemical Value Chain

Private equity investor Cinven is acquiring MBCC Group’s admixture business from Swiss construction chemicals major Sika on the rebound. Earlier, the British Competition and Markets Authority (CMA) had turned thumbs down on plans to sell the business to Ineos, citing antitrust concerns.

March 25, 2023

Air Liquide constructing ammonia-cracking pilot plant in Antwerp

Chemical Value Chain

Air Liquide S.A. (Paris) announced the construction of an industrial scale ammonia (NH3) cracking pilot plant in the port of Antwerp, Belgium. When transformed into ammonia, hydrogen can be easily transported over long distances.

March 25, 2023

EcoVadis grants Huhtamaki Gold Medal third year in a row

Chemical Value Chain

Huhtamaki receives a gold medal from EcoVadis on its sustainability performance – for the third year running. Its score places Huhtamaki in the top 4% of over 100,000 rated companies across the globe. EcoVadis is the world’s largest and most trusted business sustainability index.

How can we help you?

We're easy to reach