Cnooc Ltd. (883), China’s biggest offshore
oil and gas explorer, is considering selling its stake in
Argentina’s Bridas Corp. to free up money for other projects,
according to people with knowledge of the deliberations.
The Chinese state-owned producer recently reviewed its
overseas projects and is weighing a sale of the Bridas holding
if it can make a profit on the disposal, said the people, who
asked not to be identified as the information is private. Cnooc
bought 50 percent of Bridas for $3.1 billion in 2010, while the
rest is owned by Argentina’s billionaire Bulgheroni brothers.
Cnooc is under pressure to cut operating costs, after
boosting planned capital spending for 2014 by 31 percent to 120
billion yuan ($19.3 billion) while output is only expected to
rise 5.6 percent. Sinopec and PetroChina Co., the nation’s top
two oil producers, said last month they will cut spending,
invite private investment and focus more on returns this year.
“It should be a good thing if Cnooc manages to sell the
asset and redeploy the money elsewhere,” said Neil Beveridge, a
Hong Kong-based analyst at Sanford C. Bernstein Co. “The
contribution from Argentina is minimal, and the investment as a
whole puts Cnooc in a passive position as a minority
shareholder.”
Cnooc shares rose as much as 1.8 percent at 9:47 a.m. in
Hong Kong, even as the city’s benchmark stock index slumped.
Bridas owns 40 percent of oil and gas producer Pan American
Energy LLC, after an effort to acquire the remaining 60 percent
stake from BP Plc (BP/) failed in 2010. Pan American Energy produced
211,000 barrels of oil equivalent daily last year, according to
its website.
Canadian Push
Pan American Energy’s Cerro Dragon oil field, located in
the San Jorge Gulf basin, is the largest in Argentina. A
Beijing-based spokeswoman at Cnooc declined to comment.
The $3.1 billion acquisition of Bridas marked Cnooc’s entry
into Latin America. The focus of the company’s overseas
operations shifted to Canada after it completed a deal to
acquire Nexen Inc. for $15.1 billion in 2013 in China’s biggest
overseas acquisition.
Cnooc’s South American projects, including its share of
Bridas, contributed 16.1 million barrels of oil equivalent last
year or 4 percent of total output, according to Cnooc’s annual
earnings statement. Nexen contributed 60.8 million barrels of
oil equivalent, or 15 percent of total output, while production
from offshore China accounted for 64 percent, it showed.
Ending Dispute
Argentine President Cristina Fernandez de Kirchner’s
government seized 51 percent of YPF SA, then an arm of Repsol
SA, in April 2012 after saying the Spanish oil company hadn’t
invested enough in the operations.
Repsol’s board agreed in February to accept at least $5
billion in compensation for Argentina’s expropriation of the
unit. Ending the two-year international dispute may help attract
investors to the country to develop some of the world’s largest
shale fields.
Argentina’s Chubut provincial prosecutor said last week he
initiated a probe of alleged bribes by Pan American Energy seven
years ago to extend the Cerro Dragon oil field concession. If a
judge rules bribes were paid, the extension will be considered
void and the company’s concession will expire in 2017, Chubut
prosecutor Miguel Montoya said by phone.
Montoya filed the investigation request with the province’s
attorney general after it became public March 30 that the U.S.
Securities and Exchange Commission initiated a similar probe in
2010. Pan American denied any wrongdoing in full-page
advertisements published in Argentine national newspapers last
week.
To contact the reporters on this story:
Aibing Guo in Hong Kong at
aguo10@bloomberg.net;
Zijing Wu in Hong Kong at
zwu17@bloomberg.net
To contact the editors responsible for this story:
Philip Lagerkranser at
lagerkranser@bloomberg.net;
Jason Rogers at
jrogers73@bloomberg.net
Ben Scent