* Sinopec held talks with Repsol to buy YPF-sources
* Nationalisation derails deal, sources say
* Chinese report says companies have a non-binding agreement
* Repsol chairman says lots of interest shown in YPF
* Argentina has unveiled plans to take control of YPF
By Charlie Zhu and Jim Bai
HONG KONG/BEIJING, April 18 Argentina's move to
nationalise local oil company YPF, controlled by
Spain's Repsol, has scuppered years of planning by
China's Sinopec Group to buy the South American company, sources
Bankers said China's second-largest oil company had held
talks with Repsol to buy its controlling 57-percent stake in
YPF. Chinese website Caixin.com cited a source as saying Sinopec
had reached a non-binding agreement to take over YPF for more
than $15 billion.
But plans by Argentine President Cristina Fernandez to seize
control of YPF, which have incensed Spain and sparked
international criticism, have killed any hopes that state-owned
China Petrochemical Corp (Sinopec) could seal a deal, they said.
"It's too hairy for any Chinese major to put in that much
money, unless there is a special relationship with the
Argentinian government, which I doubt," said a mergers and
acquisitions banker, who has advised Chinese state-run oil
companies on overseas acquisitions.
"This is a challenging situation for anybody given the
government action. To me it looks like political suicide to now
allow a Chinese company to own YPF soon after announcing the
nationalisation. I don't they can go flipflop like that."
Bankers said Sinopec's interest in YPF went back at least
The Caixin.com report said Sinopec was in talks with Repsol
to buy YPF despite the nationalisation threat and the Financial
Times said Repsol had not informed Argentina of the discussions
with the Chinese oil firm.
Sinopec declined to comment. "We don't comment on market
rumours," Sinopec Group spokesman Huang Wensheng said late on
YPF has been under intense pressure from Fernandez's
center-left government to boost production and its share price
has plunged due to months of speculation about a state takeover.
Caixin.com's report said Sinopec believed YPF's oil blocks
in Argentina hold large development potential and it was
confident it could meet the Argentine government's requirements
to accelerate development and production.
Repsol Chairman Antonio Brufau declined to comment on the
Sinopec interest in YPF but at a news conference on Tuesday said
the company had received lots of international interest in
Banking sources said even if Repsol reached an agreement
with a foreign company like Sinopec, the deal would not
materialise because the Argentine government would block the
"Maybe it is an opportunity but it is a political
minefield," a banking source familiar with Chinese oil
companies' overseas strategy said.
Some Spanish media reports this week that CNOOC Ltd
, China's largest offshore producer, was
looking at buying YPF were dismissed because the company had
struggled to expand in the country.
Sources familiar with CNOOC's acquisition strategy cited a
decision in November by the firm's Bridas Energy Holdings unit
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
BP and CNOOC could not win Argentine regulatory approval.
Fernandez previously nationalised private pension funds and
the country's flagship airline. Other countries in South America
have carried out similar moves in recent years, most noticeably
Venezuela, undermining their credentials with foreign investors.
That is likely to mean Chinese energy firms place greater
emphasis on securing assets in Brazil, where analysts say the
political landscape is relatively more stable and open to
"I am not too bothered about Argentina. I am more bothered
about Brazil. The value of Sinopec Group's upstream business is
in Brazil not in Argentina," said Scott Darling, director of
Barclays Capital's Asia oil-and-gas research.
Sinopec Group spent $7.1 billion to buy 40 percent of
Repsol's deepwater oil assets in Brazil in 2010.
In November last year, Sinopec agreed to pay $3.54 billion
to Portuguese oil firm Galp Energia for a 30 percent
stake in its deep-sea oil assets in Brazil.
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 rapid growth.
The group, which bought Occidental Petroleum Corp's
Argentine assets for $2.5 billion last year, wants to more than
double its equity oil output from overseas projects to over 1
million bpd by 2015 from 2011.