Bloomberg reported that China Petrochemical Corp, Asia biggest refiner will acquire Occidental Petroleum Corp Argentine oil and gas unit for USD 2.45 billion to increase overseas reserves to meet Chinese demand.

The Chinese company known as Sinopec Group said the purchase of Occidental Argentina Exploration & Production Inc represents China Petrochemical first investment in Argentina oil and gas industry. The deal is subject to government approvals.

The transaction follows the USD 7.06 billion stake purchase in Argentina Pan American Energy LLC last month by a venture partly owned by Beijing-based Cnooc Ltd. The acquisition of the Occidental unit gives Sinopec Group access to fields that produced more than 51,000 barrels of oil equivalent a day last year and proven and probable reserves of 393 million barrels.

Mr Shi Yan an analyst at UOB-Kay Hian Ltd said “My initial thought is this deal seems a little bit expensive. I estimate they are paying about USD 6.20 a barrel but it seems to be partly for probable reserves not proven reserves. Cnooc recently paid about USD 9.10 per barrel for assets in Argentina, but that was for proven reserves.”

The acquisition takes total Chinese investments in the South American oil industry this year to more than USD 15 billion. In October, Sinopec Group agreed to pay USD 7.1 billion for a 40% stake of Repsol YPF SA Brazilian unit. The investment was China largest overseas oil deal since Sinopec bought Addax Petroleum Corp. for CAD 8.3 billion last year to gain reserves in Iraq’s Kurdistan and West Africa.

(Sourced from Bloomberg)