OREANDA-NEWS. April 26, 2012. Argentina’s move to nationalize 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 said.

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 USD15 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 nationalization. I don’t they can go flipflop like that."

Bankers said Sinopec’s interest in YPF went back at least five years.