The proposed deal that would give Bridas total control of Pan American Energy has been terminated.
As predicted in October, the proposed $7bn sale of BP's 60% share in the Argentine crude-oil producer has collapsed, with the intended purchaser, Bridas Energy Holdings - an Argentinian company itself part-owned by China's CNOOC - terminating the deal.
The sale was intended to be part of BP's major business restructure, announced after the Gulf of Mexico disaster last year, with a view to divesting non-strategic assets. Although a potential blow after the company's recent announcement to extend the programme to $45bn by 2013, BP are apparently sanguine about Bridas' decision, stating that it is now not looking to sell its stake to anyone else, with both PAE and BP in good financial state.
However, a terse statement from CNOOC indicated that the Bridas conglomerate was less impressed. The company stated: "certain conditions precedent to the completion of the deal were not obtained as expected" leading to Bridas executing its opt-out clause in the deal. While BP claims the deal was scuppered by lack of approval from Chinese and Argentinian authorities, other reports have cited Bridas as saying "legal issues and the way BP handled the transaction"were to blame.
The result is that BP will have to return the $3.5bn deposit paid by Bridas as part of the initial negotiations, although BP claims this will not significantly affect its cash reserves which the company listed at $18bn in September this year.
Following the collapse, the 60/40 split between BP and Bridas in PAE will remain, as will the existing governance arrangements. In the meantime, CNOOC stated it will be looking to spend its money elsewhere.