Cnooc Said to Plan $3 Billion Acquisition of Bridas (Update1)
March 14, 2010, 5:32 AM EDT(Adds Cnooc’s scheduled announcement in second paragraph, analyst comment in fourth.)
By Cathy Chan
March 14 (Bloomberg) -- Cnooc Ltd., China’s biggest offshore oil explorer, plans to buy Argentina’s Bridas Group from Carlos Bulgheroni for more than $3 billion, according to two people familiar with the discussions.
The transaction would give Beijing-based Cnooc a 40 percent stake in Pan American Energy LLC, a joint venture between Bridas and BP Plc, said the people, who asked not to be identified before an announcement. The companies may sign an agreement on the sale as early as today, the people said. Cnooc will make an announcement later tonight, the company said in an e-mailed statement without elaborating.
A purchase by Cnooc would add to at least $13 billion of energy acquisitions by Chinese companies since December 2008 as the nation scours the globe for resources to feed the world’s fastest-growing major economy. Cnooc was earlier seeking to bid for a Devon Energy Corp. stake in an Azerbaijan oil field, said two people with knowledge of the matter in February.
“Given China’s increasing reliance on imported crude oil and the nation’s robust demand in fuel driven by the rapid growth in automobile sales, it is a priority for the Chinese government and its companies to secure resources globally,” said Wang Aochao, head of China energy research at UOB-Kay Hian.
‘Good Progress’
Cnooc Chairman Fu Chengyu said in an interview earlier today that there may be an announcement on foreign cooperation “very soon.” The company has made “good progress” since stepping up efforts to increase cooperation with foreign countries and companies in December 2008, Fu said.
“We are currently cooperating on many projects and the overall development is very good,” Fu said in Beijing. “We are looking at all the places globally that can generate opportunities.”
A Pan American spokesman, who cannot be named, declined to comment on March 12. Two calls to Bulgheroni’s office on March 12 weren’t returned.
Pan American Energy was formed in September 1997 through the merger of the Argentine units of Bridas and Amoco Corp., which was acquired by BP in August 1998. Pan American has since become Argentina’s second-biggest producer of crude, behind the Argentine unit of Repsol YPF SA, and was the country’s largest exporter of oil in 2009.
Argentine Takeover
YPF, as the Argentine unit of Repsol is called, itself was named as a possible takeover target by Cnooc last year, as well as by rival China National Petroleum Corp. Repsol has been trying to sell its stake in YPF since at least 2008 to fund expansion operations elsewhere.
Like Repsol, Bridas would also use funds from a sale of its Argentine assets to invest in others parts of the world. Argentine newspaper Clarin reported that Bridas plans to use the proceeds from a Pan American sale in a gas-pipeline construction project in Turkmenistan.
Bridas has been present in the Central Asian country since 1993, when it signed an agreement with a state-owned company to develop oil and gas fields in the southwestern part of Turkmenistan and construct a 800-mile long gas pipeline linking the nation to Pakistan through Afghanistan called the Trans-Afghanistan Pipeline.
Two years later, the Turkmen government halted the project as it sought to increase its participation in the joint venture, according to court filings. Bridas took the dispute to the International Chamber of Commerce, which ruled in its favor. The ruling was appealed by Turkmenistan in a U.S. court, where Bridas won in 2004.
Bridas also signed an agreement with Afghanistan to build the part of the pipeline that would cross Afghanistan toward Pakistan. The contract was signed in 1996, when the Taliban took control of most of Afghanistan.
--Wang Ying. With assistance from Dale Crofts and Rodrigo Orihuela in Buenos Aires. Editors: John Liu, Jeffrey Donovan
To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net; Ying Wang in Beijing at ywang30@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net.
