CNOOC, Bridas Abandon $7bn PAE Purchase

A joint venture between China’s CNOOC and Bridas Energy Holdings (BEH) has decided against purchasing a 60% equity interest in Argentina’s Pan American Energy (PAE) from BP. Earlier this month, talks had been extended with BP to acquire the British oil company’s stake in PAE for $7.06bn in cash, and a final closing date had been expected sometime next year. This comes shortly after the Argentine government’s mandate in October calling for oil and mining companies to repatriate export earnings. In a statement, Yang Hua, CNOOC’s CEO, expressed a willingness to strengthen its partnership with BEH and expand in Argentina, but noted that “…certain conditions precedent to the completion of the deal were not obtained as expected, and Bridas chose to terminate the transaction”. The sale of BP’s 60% stake in the Argentine oil company was agreed in late 2010, after which Bridas paid BP $3.53bn as an initial deposit. The agreement states that should the sale fall through, BP would return the deposit and pay an additional $700m for “amendments to the Pan American Energy limited liability company agreement,” according to a statement in BP’s recently released 3Q 2011 earnings report. The sale of its stake in Pan American Energy was agreed as part of BP’s strategy of selling a number of worldwide assets following the Gulf of Mexico oil spill. Standard Chartered was advising BP.