Ready to tango: CNOOC Ltd in pairing with Bridas Energy Holdings.
CNOOC Ltd woos Bridas
Hong Kong listed CNOOC Ltd expects to complete in the first half of this year, a $3.1 billion acquisition of a 50% stake in a joint venture with Argentina’s oil and gas producer Bridas Energy Holdings.
The acquisition marks CNOOC Ltd’s first foray into the Latin American upstream sector. Other than interests in 20 Argentine oil and gas blocks, the joint venture will also be active in upstream sector in Bolivia and Chile.
The deal is expected to boost CNOOC Ltd’s production by 9% to 577,000 barrels of oil equivalent per day based on 2009 figures, according to CNOOC Ltd’s chief Yang Hua. Latin America’s share is estimated at 8%.
Bridas holds a 40% stake in Pan American Energy, a hydrocarbons producer 60% controlled by UK supermajor BP.
The hydrocarbons producer operates six out of the 11 producing blocks and owns 90% in the near shore 9000-square-kilometre GSJM Block.
Total certified reserves in the 20 blocks stood at 1.59 billion barrels of oil equivalent.
Bridas managed to double its gas output and grow its oil output by 47% even as its compatriots are seeing a 3% and 27% fall, respectively in oil and gas production from 2001 to 2009, according to Yang.
Primarily an onshore hydrocarbon producer, the Argentine outfit also enjoys a lower cost of production than CNOOC and other independents like Talisman Energy and Devon Energy.
Cost of production excluding exploration expenses and export duty stood at $17.1 per barrels, compared to CNOOC’s $19.8 per barrel, Devon’s $36.2 per barrel and Talisman’s $32.8 per barrel.