Oct. 1 (Bloomberg) -- BP Plc’s $7.1 billion deal to sell Argentine crude producer Pan American Energy LLC is at risk of collapse, jeopardizing China’s biggest energy acquisition this year, according to a person with knowledge of the matter.
BP’s agreement to sell its 60 percent stake to partner Bridas Corp., a company owned by Chinese oil producer Cnooc Ltd. and Argentina’s billionaire Bulgheroni family, has hit opposition from politicians and may not be completed when the accord expires in November, the person said, declining to be identified as the details are private.
The London-based company is prepared to let the deal lapse and continue as a partner in the oil production venture, he said. Still, no final decision has been made and the transaction could yet be completed.
BP fell 0.8 percent to 388.5 pence in London trading yesterday.
“Deals of this scale take time to finalize with competition authorities,” London-based BP spokesman Robert Wine said in an e-mail. “We are working with the other shareholders in PAE to secure competition approvals and complete the deal. We can confirm the deal has not yet closed as Argentine competition approvals remain outstanding, but we remain optimistic that these approvals will be granted in due course.”
An official at Pan American, which speaks on behalf of Bridas, said he couldn’t comment on shareholder issues.
“We’re still waiting for the Argentine government and regulatory approvals,” Jiang Yongzhi, Beijing-based spokesman for Cnooc, said in an e-mail. “We will keep the market well informed of the progress.”
BP has agreed to more than $25 billion in asset sales since pledging to divest up to $30 billion of fields after the Gulf of Mexico spill last year to shore up its balance sheet. The company had about $20 billion in cash at the end of the second quarter. It has turned a profit in every period since the record $17 billion loss in the second quarter of 2010, bolstered by a 40 percent gain in Brent crude prices.
Chinese oil producers including Cnooc and China Petrochemical Corp. are buying assets in Latin America to feed surging demand as other producers sell stakes to help fund the development costs. Last year, Sinopec Group, as China Petrochemical is known, paid $7.11 billion for 40 percent of Repsol YPF SA’s Brazilian unit.
Bridas agreed in November to buy from BP the 60 percent in Pan American it doesn’t already own. The deal, which was due to complete by June 30, was put on hold until after Argentina votes in a presidential election next month, Yang Hua, chief executive officer of Beijing-based Cnooc, said Aug. 24.
Horacio Mizrahi, the spokesman for the Argentine Planning Ministry, which oversees the energy industry, could not be reached on his mobile phone and did not return a message seeking comment left at his office.
--With assistance from Rodrigo Orihuela in Buenos Aires and Aibing Guo in Hong Kong. Editors: Will Kennedy, Stephen Cunningham.
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