BP’S long-awaited deal to sell a majority stake in Argentina’s second-largest oil producer Pan American Energy for $7bn (£4bn) collapsed in acrimony yesterday after the buyer walked away.
Bridas, the oil and gas firm owned by Cnooc of China and Argentina’s Bulgheroni family, said BP was to blame for the collapse of the deal because it had failed to resolve various legal issues.
BP confirmed yesterday that it had received “a notice of termination”, adding that the closing of the transaction had been delayed because it had not secured certain regulatory approvals.
“Under the terms of the agreement, Bridas Corporation had exclusive responsibility for obtaining these approvals,” BP added in a statement.
The oil major first struck a deal to sell 60 per cent of Pan American in November last year, in a move designed to help raise funds to pay for the cleanup of its Gulf of Mexico oil spill.
Suggestions that the deal was on the brink of collapse have been circulating for weeks as the parties neared the 1 November deadline when the transaction was due to be completed.
Bob Dudley initially said at the group’s third quarter results last month that it was waiting on regulatory approval and “fully expected the 1 November deadline to be extended”.
The failure of the sale will put pressure on Dudley, who last month announced plans to increase the size of its disposal programme to a total of $45bn (£28bn). The group has so far raised about $26bn in asset sales.
The group also said it aimed to double cashflow by 2014, restart a programme of share buybacks and from next year begin to pay investors higher dividends.
Nevertheless Dudley insisted at the time that Pan American deal was not as important to the firm’s cashflow today as it was a year ago, when oil prices were low.
BP said yesterday it does not plan to divest additional assets to offset proceeds that would have been received from the PAE transaction
The cancellation of the deal means BP will now have to repay Bridas’ $3.53bn deposit received for the PAE stake at the end of 2010, which will not impact its level of gearing.
BP said it “will now be considering all its strategic options regarding PAE,” while Bridas said it would be willing to continue negotiations despite the deal’s termination.