Cash-strapped BP in talks to sell major oil asset in Argentina

BUENOS AIRES, Sept. 20 (UPI) -- Cash-strapped BP is in talks with China's oil giant CNOOC to relieve itself of majority stake in Argentina's Pan American Energy LLC to raise cash for compensation claims.

BP is under mounting pressure to have cash ready for a spate of compensation claims over the Gulf of Mexico Deepwater Horizon disaster, the largest oil spill in U.S. history earlier this year.

BP and the China National Offshore Oil Corporation, the country's third largest national oil company and biggest offshore oil explorer, began talking about a further sale earlier this year after CNOOC acquired 20 percent of the Argentine company.

Pan American Energy is Argentina's second-largest oil producer, after Repsol YPF S.A., accounting for about 17 percent of the country's overall output.

Talks on a new deal that would give CNOOC control of the company appeared snagged over the final price tag. Industry analysts said the final price for the 60 percent, likely to be around $10 billion, would still require BP to raise another $20 billion in preparation for compensation payouts.

If implemented, this would be CNOOC's biggest purchase so far, after shopping for oil assets worth about $6 billion over the past four years.

China's national energy industries are implementing a state-led strategy to secure sources for hydrocarbons to meet existing and future demands in an expanding economy.

A question as yet unanswered is whether CNOOC, once in control of Pan American, would want to go it alone or would seek partnerships for a long-term operation, seen as a precursor to further Chinese acquisitions in Central and South America.

Meanwhile, CNOOC and China Petrochemical Corp. are in the market for a hefty share of Brazil's OGX Petroleo & Gas Participacoes S.A., which is conducting the largest private sector exploratory campaign in Brazil and owns oil fields in the Campos Basin.

OGX announced Monday it identified the presence of hydrocarbons in the Maastrichtian section of well 1-OGX-20-RJS, in the BM-C-41 block, in the shallow waters of the basin. OGX holds a 100 percent working interest in the block.

"This discovery highlights the importance of the Maastrichtian section in our blocks in the Campos Basin, where oil bearing reservoirs were initially identified in the OGX-5 well, Krakatoa prospect, and now were also found in the BM-C-41 block, once again presenting excellent permo-porosity characteristics," said Paulo Mendonca, general executive officer of OGX.

"The well OGX-20 marks the 1-year anniversary of the initiation of our exploratory campaign, which has demonstrated an unprecedented success rate and continues in full execution phase aiming for new discoveries and the delineation of the discoveries already made," Mendonca said.

Hydrocarbons were identified in two different levels in sandstone reservoirs in the Maastrichtian section of the OGX-20 well. The drilling of well OGX-20, also known as the Tupungato prospect, will follow to an estimated final depth of about 12,000 feet.

The OGX-20 well, located in the BM-C-41 block, is about 50 miles off the coast of the state of Rio de Janeiro at a water depth of about 430 feet. The rig Ocean Ambassador began drilling there Sept. 5.