Sinopec Acquires U.S. Western Petroleum Argentina Assets

China National Petroleum Corporation (11.80,-0.15,-1.26%) has announced that it has passed its wholly-owned subsidiary Sinopec (8.29,-0.07,-0.84%) Group International Petroleum Exploration and Development Co., Ltd. and the United States Western Petroleum Corporation ("OXY" Signed a definitive agreement to acquire 100% of the O XY Argentine subsidiary and its associated companies (collectively OXY Argentina) for US$2.45 billion.

Sinopec said that this transaction was the first time for Sinopec to enter the Argentina oil and gas exploration and development market. This transaction also requires relevant government approval.

OXY Argentina holds 23 production and exploration blocks in the provinces of Santa Cruz, Mendoza and Chubut, of which 19 are operating areas. As of December 31, 2009, the total proven and possible reserves of the project was 393 million barrels of oil equivalent. In 2009, 22 production blocks produced more than 51,000 barrels of oil equivalent per day. Western Petroleum Corporation is the fourth largest oil company in the United States and mainly engages in oil and gas exploration and development activities in the United States, the Middle East, and Latin America.

Prior to this, Sinopec completed several substantial acquisitions this year. For example, it spent about $13.1 billion to acquire the Canadian oil sands project and Petrobras’s equity. According to survey data released by the UK's energy consultancy “Wood Mceckenie”, Chinese companies’ investment in the acquisition of oil and natural gas resources overseas during the period from January to October this year reached US$24.6 billion, accounting for 20% of such transactions in the world. Compared with two years ago, it has increased nearly 5 times.

Zhang Kang, deputy director of the Advisory Committee of the Petroleum Exploration and Development Research Institute of Sinopec, told Nandu that Sinopec’s upstream oil and gas exploration and production section is relatively weak. From the perspective of resources, the above acquisition has positive significance for the future development of Sinopec.