Gain from Bridas exit proves tough task for CNOOC

CNOOC, China's dominant offshore oil and gas producer, is reportedly considering selling its stake in Argentina's Bridas although analysts said it would be tough to find a buyer willing to give the Chinese firm a profitable exit.

The state-backed firm was weighing the merit of disposing of its 50 per cent stake in Bridas, for which it paid US$3.1 billion, if it could make a profit to free up funds for other projects, Bloomberg cited sources as saying. The other half is owned by Argentina's Bulgheroni family.

When CNOOC signed a deal just over four years ago to buy into Bridas, one-month Brent crude oil futures were trading at US$87.50 a barrel, about US$13 lower than current levels. The West Texas Intermediate benchmark was US$79.40 a barrel, US$26 less than current levels.

CNOOC's Beijing-based spokeswoman did not return phone calls or respond to e-mails because it was a public holiday on the mainland.

Analysts differ on why CNOOC may want to sell the stake, but agreed there was no urgent need to sell and it would not be easy for it to book a gain.

"It's a bit surprising even though Argentina's oil industry has not exactly been investor-friendly," said Adrian Loh, Daiwa Securities' regional head of oil and gas research. "I don't expect a long queue of potential buyers for the asset, and even if it is sold at a premium, the proceeds won't make much difference for CNOOC, whose net debt-equity ratio is not high."