BG Group PLC (BRGYY, BG.LN) has agreed to sell its stake in Argentine natural gas distributor Metrogas, a spokesman for Metrogas confirmed Thursday.
BG Group did not disclose the amount for the sale and the Metrogas spokesman said he was unaware of the details.
The sale is subject to a decision by state-run oil company YPF SA (YPFD.BA, YPF) not to exercise its "first refusal" right to make a similar or superior offer for the stake.
YPF holds a 45.3% stake in Metrogas's controlling company Gas Argentino SA, which owns 70% of Metrogas. YPF holds the stake through YPF Inversora Energetica. What BG Group agreed to sell is its 54.7% stake in Gas Argentino.
A spokesman for YPF could not be reached for comment.
Metrogas provides natural gas to around 2.2 million customers in and around the capital city of Buenos Aires. Through Metrogas, BG has held a 35-year license to distribute gas in the capital city of Buenos Aires.
But like so many other energy utilities in Argentina, Metrogas has struggled to keep afloat over the past decade.
It has suffered from the country's decade-old freeze on utility rates. While rates have been mostly frozen since 2001, operating costs have surged amid high inflation, rapidly rising labor costs and soaring demand from consumers.
Metrogas has consistently reported losses in recent years, as have some other energy utility companies.
Economists say annual inflation totals around 25%, putting pressure on almost all companies, but especially on utilities that are banned from raising prices to compensate.
BG Group agreed to sell its stake to a largely unknown company, Integra Gas Distribution, whose shareholders include local businessmen Daniel Vila and Jose Luis Manzano.
The rest of the company is composed of investment funds from Chile, the U.S. and the U.K, according to an article published Thursday in the local daily La Nacion.
Metrogas confirmed the accuracy of the article.
In the article, La Nacion cited unnamed sources who estimated the sale's value to be more than $20 million.
A spokesman for Mr. Manzano and Mr. Vila could not be reached for comment.
Write to Taos Turner at taos.turner@dowjones.com
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