RPT-UPDATE 4-Abu Dhabi ups refining drive with Cepsa takeover

Wed Feb 16, 2011 10:57am EST

(Repeats to add link)

* Total sells 48.8 pct Cepsa stake for 3.7 billion euros

* IPIC offering 28 euros per share in full bid for Cepsa

* Cepsa shares rise 23.6 percent following offer

* Total denies any interest in buying Repsol stake

(Adds more on Total's strategy, graphic)

By Jonathan Gleave and Marie Maitre

MADRID/PARIS, Feb 16 (Reuters) - Abu Dhabi increased its refining exposure by taking over Cepsa CEP.MC with the 3.7 billion euro ($5 billion) acquisition of the remaining half of the Spanish oil company from France's Total (TOTF.PA).

Wednesday's deal allows oil-rich Abu Dhabi to extend its refining capacity, while giving Total, the world's fifth-biggest oil and gas producer, cash to invest in upstream developments.

The acquisition is being made through IPIC, a wholly-owned Abu Dhabi government fund, which has a mandate to invest in the oil sector outside the emirate. It raised its Cepsa stake to 47 percent in July 2009 for $4.7 billion from 9.6 percent in 1988.

Last June, IPIC's global assets totaled $48.2 billion. It also owns stakes in German automaker Daimler (DAIGn.DE) and Virgin Galactic through its majority-owned Aabar Investments.

Total dismissed market talk it would use the Cepsa proceeds to take control of rival Repsol (REP.MC) by buying a 20 percent stake from debt-laden Spanish builder Sacyr SVO.MC.

"A takeover of Repsol would make no sense as this would go directly against our goal to reduce our European refinery capacities," a Total spokesman said.

Sacyr shares fell more than 5 percent after Total's statement. They were down 5.2 percent at 8.02 euros by 1410 GMT.

"Total is more interested in looking east with the proceeds from the sale, not west," ING analyst Jason Kenny said.

In a statement, Total said it had agreed with IPIC to develop exploration and production projects of common interest, but the French group said it was too early to elaborate. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

BREAKINGVIEWS-Abu Dhabi's Cepsa deal puzzles Spanish oil

market [ID:nLDE71F1Z3]

Graphic on Cepsa shares: r.reuters.com/tyt97r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

UPSTREAM PROJECTS

Total said last week it had earmarked $20 billion for investments in 2011, 80 percent in upstream, and was targeting projects in Russia, China, Australia and Canada -- where it spent $3.2 billion on oil sands acquisitions last year.

If Total was seeking a pure upstream play, one appealing target could be Repsol Brazil -- a country where Total has been trying to set foot in recent months. [ID:nLDE6680F5]

However, Repsol has already sold nearly half of that venture in a deal with China.

Total's share in Cepsa's oil and gas production -- which included interests in Algeria, Colombia, Egypt and Peru, represented only 1 percent of its own overall output when measured by SEC rules.

This was quite small for Total, making Cepsa's refining business a relatively bigger drag than the upstream benefit.

Total has vowed to reduce its European refining capacities, hit by weak demand and margins, by 500,000 barrels per day by year end. It has already shut a plant in Dunkirk, northern France, and is in discussions to sell its Lindsey refinery in Britain.

IPIC launched a full bid for Cepsa's remaining quoted shares at 28 euros per share, a 23 percent premium to Tuesday's close, and said it would delist Cepsa from the Madrid stock exchange.

Cepsa shares, suspended ahead of the announcement, reopened up nearly 24 percent, trading 22.8 percent higher at IPIC's bidding price of 28 euros by 1355 GMT. Total's shares were little changed, down 0.2 percent at 43.39 euros each. (Additional reporting by Judy Macinnes; Writing by Alexander Smith; Editing by Dan Lalor and David Holmes) ($1 = 0.7406 euro)

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