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October 10, 2017

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Sinopec to sell oil assets in Argentina

ADVISERS to China’s Sinopec have offered its oil assets in Argentina to about a dozen potential suitors, three sources familiar with the matter said, as losses and labor headaches prompt Asia’s largest refiner to pull out.

The Argentine oil and gas assets, mainly in the southern province of Santa Cruz, could be worth US$750 million to US$1 billion, one of the sources said.

That would be less than half the US$2.45 billion Sinopec paid in 2010 to buy the Argentine assets from US-based Occidental Petroleum Corp, marking an aggressive drive to diversify its oil sources at the time.

Prospective buyers for the assets — mainly large energy firms from the United States, Europe, Africa and Latin America — include Angola’s state oil company Sonangol and two Russian energy giants, including Rosneft, said two of the sources.

Mexico’s Vista Oil & Gas has also expressed an interest, according to a separate source.

Meanwhile, Compania General de Combustibles, the energy arm of Argentine holding company Corporacion America, would also be studying some of the assets in Santa Cruz, Corporacion America spokeswoman Carolina Barros said.

One of the sources said there could be more than 15 prospective suitors.

Sinopec is being advised by Scotia Waterous, a unit of Canada’s Bank of Nova Scotia, which focuses on energy deals, two of the sources said.

All the sources declined to be named as the sale plans are confidential.

Sinopec and Sonangol did not respond to requests for comment. Asked about the sale and its interest, Rosneft said it was not able to confirm the information.

Vista, Scotia Waterous and Argentina’s energy ministry declined to comment.

In 2010, when Sinopec bought the Argentine assets, China — the world’s No. 2 oil consumer — was scouting for natural resources to feed its surging economy.

Worsening economic conditions and social unrest in Argentina, however, have “weighed” on the operation since then, Sinopec said in September last year.


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