UPDATE 2-Sinopec in talks to buy Repsol unit YPF-report

Tue Apr 17, 2012 10:09am EDT

Related Topics

* Report says companies have a non-binding agreement

* Repsol chairman says lots of interest shown in YPF

* Bankers doubt deal can be reached

* Argentina has unveiled plans to take control of YPF

* YPF pressured by Argentine government to boost output

HONG KONG/BEIJING, April 17 (Reuters) - China Petrochemical Corp (Sinopec Group) is in talks with Repsol to buy the Spanish oil major's Argentine unit YPF, even though YPF faces nationalisation, a Chinese financial news website reported on Tuesday.

Citing a source close to Sinopec, Caixin.com said China's second-largest oil company had reached a non-binding agreement to take over YPF for more than $15 billion.

Huang Wensheng, a spokesman for Sinopec Group, dismissed the report as rumour and said he had no comment on it. "We don't comment on market rumours," he said by telephone.

Repsol Chairman Antonio Brufau said at a news conference the company had received lots of international interest in participating in YPF, but declined to comment on Sinopec.

The Chinese report said Sinopec believed YPF's oil blocks in Argentina hold large development potential and it was confident of meeting the Argentine government's requirement to accelerate development and production.

Argentine President Cristina Fernandez unveiled plans on Monday to take control of YPF, drawing swift warnings from key trade partners.

YPF has been under intense pressure from her center-left government to boost production, and its share price has plunged due to months of speculation about a state takeover.

POLITICAL MINEFIELD

Banking sources said they doubted a deal involving Sinopec or another Chinese company would work out given the Argentine government's move to seize control of YPF.

"Maybe it is an opportunity but it is a political minefield," said one banker, who asked not to be identified because he was not authorised to speak to the media.

Some Spanish media speculated earlier this week that CNOOC Ltd , China's largest offshore producer, was looking at buying YPF.

But sources familiar with CNOOC's acquisition strategy said CNOOC was unlikely to make such a move given its difficulties in expanding in the Argentine market in the past.

They cited CNOOC unit Bridas Energy Holdings' decision in November to terminate a $7 billion deal to buy BP Plc's 60 percent stake in Argentina-based oil-and-gas group Pan American Energy LLC (PAE). Insiders said the deal collapsed because CNOOC could not win Argentine regulatory approval.

Sinopec Group, parent of Asia's largest refiner Sinopec Corp , has launched at least 74 acquisition deals worth $48.1 billion since 2005, Thomson Reuters data shows, as part of China's attempts to secure resources to feed the country's growth.

Sinopec Group, which bought Occidental Petroleum Corp's Argentine assets for $2.5 billion last year, has vowed to more than double its equity oil output from overseas projects to over 1 million bpd by 2015 from 2011.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.