Repsol YPF reported on China oil assets shopping list

BUENOS AIRES, Aug. 11 (UPI) -- Repsol YPF, the Argentine unit of Spain's oil production giant Repsol, appears to be within sights of Chinese state corporations that are shopping globally to increase the country's international hydrocarbon asset portfolio.

Chinese overtures to Repsol YPF have been in the news since the beginning of 2009 with varying degrees of interest in a partnership with and, more recently, acquisition of the Argentine unit.

In February, Chinese media reported refiner Sinopec Corp. was in talks to buy a 20 percent stake in Repsol YPF held by Spanish construction company Sacyr Vallehermoso. The talks were inconclusive.

Repsol YPF S.A. emerged from a 1999 takeover of Argentine energy firm YPF by Spanish conglomerate Repsol S.A. An integrated oil and gas company with operations in more than 30 countries, Repsol YPF is rated as one of the 10 largest private energy firms in the world and one of the largest in Latin America.

China's overtures to Repsol YPF were in the limelight again after reports that China National Petroleum Corp. and the China National Offshore Oil Corp. were in talks with Repsol and had offered $17 billion for Repsol's stake in YPF. Repsol has denied it received an offer but offered no details on the contacts made.

Industry sources said Chinese shopping for hydrocarbon assets to meet the country's growing energy needs had taken its negotiators to the four corners of the world, sometimes with less than impressive results.

Chinese analysts have warned acquisition teams need to be more cautious and prudent when buying oil and gas assets abroad. But falling prices amid a global recession are proving too much of a temptation for the Chinese.

In June CNPC signed contracts with Britain's BP PLC to develop the Rumaila oil field in Iraq, said to contain the third-largest oil reserves in the world. Also in June, PetroChina, a subsidiary of CNPC, completed the purchase of a 45.51 percent stake in Singapore Petroleum Co. Soon afterward, CNPC's lesser rival, Sinopec Group, agreed to acquire the Geneva-based oil exploration company Addax Petroleum Corp. for $7.19 billion, giving China access to oil reserves in West Africa and Iraq.

Although industry analysts see the Chinese asset hunt as timely, in view of liquidity problems caused by the financial crisis, they caution China against raising its profile too much and too soon.

An earlier Russian Gazprom bid for a stake in Repsol YPF was rejected by Spain after an outcry in the country. Right-wing Popular Party leader Mariano Rajoy opposed the deal and Repsol YPF President Antonio Brufau had to issue assurances that Repsol will continue to be a "private, independent and Spanish" company.

However, Sacyr admitted it was pursuing talks with several possible investors. Sinopec Corp. was later identified by Chinese media as one of the interested parties.