BP, Bridas set up Argentine giant

E&P company Pan American Energy (PAE) and refiner Axion Energy will together establish Argentina’s largest private energy company, BP announced in a statement on Monday.

PAE, a 60/40 JV between BP and Bridas Corporation, and Axion Energy, a wholly owned subsidiary of Bridas, will merge in a cash-free transaction to become the Pan American Energy Group (PAEG).

“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,” BP CEO Bob Dudley said in the statement. “These fit well with BP’s strategy and will allow us to strengthen and deepen our long-term relationship with Bridas.”

Under the agreement, both parent companies will be 50% shareholders in PAEG. The new company’s board will include eight directors, four each from BP and Bridas. According to the statement, all of PAEG’s activities will be self-funded.

The deal, which is expected to be finalised in early 2018 following regulatory approval from several authorities, will allow PAEG to pursue opportunities not only in Argentina, but also Uruguay, Paraguay and Mexico.

“For the past 58 years, we have been investing in the energy sector in Argentina and the region. Efficient investment has been the main factor behind our growth as an oil and gas company,” said Alejandro Bulgheroni, chairman and president of Bridas Corporation. “By signing this agreement, a new phase begins for our company, as we integrate our operations with those of our partners.”

With an output of more than 260,000 boepd in 2016, PAE is Argentina’s second-largest hydrocarbons producer. The company operates Cerro Dragón, the largest oilfield in the country, as well as several blocks in the unconventional Vaca Muerta play.

Meanwhile, Axion Energy’s Campana refinery has the capacity to produce up to 90,000 bpd of refined products. Additionally, the company owns a network of around 750 petrol stations across Argentina, Paraguay and Uruguay.