YPF spurns offer to buy Petrobras Argentina assets

OREANDA-NEWS. October 09, 2015. Argentina's state-controlled YPF has withdrawn from bidding for the purchase of Brazilian state-controlled Petrobras? extensive local assets, asserting that the company's price expectations are too high.

"We always said we were not willing to pay more than what we thought it was worth. They think it is worth more, so we are backing away for now," a YPF official said.

Petrobras sent an invitation in early July to YPF, Argentinian independents Pluspetrol and Tecpetrol, and BP-controlled Pan American Energy to present offers for the company's local upstream and downstream assets.

PAE is 60pc controlled by BP with the balance held by Bridas, a 50:50 joint venture owned by Argentina's Bulgheroni brothers and China's state-owned CNOOC.

YPF was the only one of the oil companies to bid for the 67pc stake that the Brazilian firm holds in its Argentinian subsidiary. The rest of Petrobras Argentina is held by investors, including 11.8pc by Argentina's state-owned pension fund.

Petrobras deemed YPF's offer of around \\$920mn too low, the YPF official. Petrobras Argentina declined to comment.

The company's local assets include some 30 upstream contracts, a network of service stations, the 30,500 b/d Bahia Blanca refinery in Buenos Aires province, a petrochemical plant in Santa Fe province, a majority stake in natural gas transportation company TGS and a 34pc stake in LPG fractionator Mega, among others. The company also holds interests in the power sector, operating the 825MW Genelba combined cycle plant in Marcos Paz, Buenos Aires province and the 245MW Pichi Picun Leufu hydroelectric plant in Neuquen province. It holds minority stakes in other thermal plants.

Petrobras? plan to sell its long-held Argentinian assets are part of a wider divestiture campaign totaling \\$15.1bn in 2015-16. But the company said only \\$700mn of that would take place this year. The company?s retail network in neighboring Chile is also on the block.

The heavily indebted firm has been forced to slash investment because of the sharp decline in oil prices since mid-2014, a widespread corruption scandal and a sharp depreciation of the Brazilian currency.

Petrobras has already started to curtail its presence in Argentina. Earlier this year, the company sold stakes in 26 oil and gas blocks in Argentina's southern province of Santa Cruz for \\$101mn to local firm Corporaci?n Am?rica. In 2010, another local firm, Oil Combustibles, bought Petrobras' 40,000 b/d San Lorenzo refinery and retail network in a \\$110mn deal.

Petrobras is Argentina's seventh-largest oil producer with operated output of 16,800 b/d in the first seven months of the year, and is the fourth-largest gas producer with operated production of 7.5mn m3/d (265mn ft3/d), according to energy secretariat data.