BP AND Bridas Corporation have formed a joint venture combining their interests in Pan America Energy (PAE) and Axion Energy, forming Argentina’s largest privately-owned energy company.
PAE is the second largest oil and gas producer in Argentina, averaging 262,000 boe/d in 2016. It has an estimated 1.56bn boe in reserves, including in the Cerro Dragon oil field and Vaca Muerta shale region. BP owns 60% of the company, with the remaining 40% owned by Bridas, which is itself a 50:50 joint venture between Bridas Energy Holdings and CNOOC of China. Meanwhile Axion, wholly owned by Bridas, refines and markets fuels, lubricants, petrochemicals and other derivatives. It owns the 90,000 bbl/d Campana refinery and more than 580 retail sites and distribution terminals in Argentina alone, along with others in Uruguay and Paraguay.
The new company, Pan American Energy Group (PAEG), will be a fully integrated energy company, covering all areas from production to consumer sales. BP CEO Bob Dudley said that the combination of the skills and expertise in the new JV would allow it to better pursue growth and development opportunities in Argentina, Uruguay, Paraguay and Mexico. The Campana refinery is already PAE’s main crude oil customer, and further integration between the businesses is likely.
“We see value-enhancing opportunities throughout PAEG’s businesses; from extending the life of mature production and developing new unconventional resources including Vaca Muerta, to growth in retail fuels and lubricants marketing. These fit well with BP’s strategy and will allow us to strengthen and deepen our long-term relationship with Bridas,” said Dudley.
PAEG’s board will include four directors from each shareholder, eight in total. The transaction, an exchange of equity with no cash component, is expected to be completed in early 2018.