UK major BP said September 11 it has agreed with Bridas to form a new, integrated energy company by combining their interests in the oil and gas producer Pan American Energy (PAE) and the refiner and marketer Axion Energy (Axion) in a cash-free transaction.

The new company, Pan American Energy Group (PAEG), will be the largest privately-owned integrated energy company operating in Argentina.

PAEG will be owned equally by BP and Bridas Corporation, itself a 50:50 joint venture of Bridas Energy Holdings of Argentina and Chinese Cnooc. PAE is currently owned 60% by BP and 40% by Bridas, while Axion is wholly-owned by Bridas. 

PAEG is expected to benefit from BP’s global upstream technical and downstream marketing experience as well as Bridas’ deep operating knowledge. The combination may also offer further integration synergies: the Axion refinery is already the primary customer for PAE’s Argentine crude oil production.

BP CEO Bob Dudley said the new integrated business would pursue growth and development opportunities in Argentina, Uruguay, Paraguay and Mexico: "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.”

“By signing this agreement, a new phase begins for our company, as we integrate our operations with those of our partners,” said Bridas CEO Alejandro Bulgheroni.

PAEG’s board of eight will comprise four directors from each shareholder and the shareholders will share nomination rights for key senior executives for the company. PAEG will be self-funded. The transaction is subject to regulatory filing or approval in several jurisdictions. Completion of the agreement is anticipated in early 2018. 

Two months ago Argentina's state YPF, BP-led PAE, Total and Germany's Wintershall signed an agreement to invest $1.15bn through December 2021 to develop two key projects in the Vaca Muerta shale gas basin, adding to the $500mn already invested in 2014-16 in those areas.

PAE was among the assets BP put up for sale to raise money in the wake of 2010 Macondo oilwell disaster but, although a $7bn price was agreed, the deal failed to complete in 2011.

William Powell