Bridas cancels deal to buy BP's stake in Pan American Energy

BP PLC said Bridas Corp. has terminated its plans to buy BP’s 60% interest in Pan American Energy LLC (PAE) for $7 billion because Bridas had not obtained Argentine antitrust approvals and Chinese regulatory approvals for the Argentina-based exploration company (OGJ Online, Nov. 29, 2010).

BP and Bridas are joint venture partners in PAE. Bridas already owns 40% of PAE, which explores, develops, and produces oil and gas in the Southern Cone region of South America. CNOOC Ltd. owns a stake in Bridas, which cited no specific reason for calling off the transaction.

PAE’s main holdings are in Argentina. Argentina President Cristina Fernandez de Kirchner on Oct. 26 ordered oil and gas companies to repatriate all future export revenue. Kirchner said the intent was to strengthen central bank controls on dollar purchases.

As a result of Bridas dropping plans to buy BP’s stake in PAE, BP will repay a $3.53 billion deposit received late last year. BP said it is no longer in discussion with Bridas about PAE.

“PAE is a strong business,” BP said. “BP is happy to return to long-term ownership of these valuable assets, given the considerable improvement in its own financial strength and circumstances, as well as the improved external trading environment.”

Since June 2010, excluding the PAE assets, BP has agreed to asset sales worth more than $19 billion. The sales came as BP paid expenses associated with the April 2010 Macondo well blowout and resulting oil spill in the Gulf of Mexico.

In October, BP announced plans to extend its divestment program to $45 billion by the end of 2013, saying the ongoing divestment program involves the sale of nonstrategic assets and is not driven by a requirement to raise cash.

Contact Paula Dittrick at paulad@ogjonline.com.

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