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Argentine oil and gas company Bridas Corp. – jointly owned by China’s CNOOC Ltd. (CEO - Analyst Report) and Argentina's Bulgheroni family – completed the acquisition of ExxonMobil Corporation’s (XOM - Analyst Report) Campana refinery in Argentina and filling stations in South America.

The purchase comprises a 90,000 barrels-per-day oil refinery as well as over 500 gas stations in Argentina and 220 gas stations in Paraguay and Uruguay. The financial value of the deal, announced in March 2011, has not been disclosed. However, sources in the oil and gas industry have estimated the transaction to be worth in the range of $800 million to $850 million.

The addition of these assets to Bridas’ portfolio will help it emerge as a fully integrated oil and gas producer. Bridas subsidiary – Axion Energy, formerly known as Esso Company – will act as the operator of the assets purchased from ExxonMobil. Bridas also said that they will carry on using the Esso brand at its gas stations and will be the exclusive distributor of Mobil lubricants.

Bridas plans to invest about $800 million over the next three years to boost gasoline yield at the Campana refinery by 50% to 650,000 cubic meters a year and diesel production by 60% to 1.2 million of cubic meters annually.

Bridas also owns a 40% stake in Pan American Energy LLC, which is controlled by BP Plc (BP - Analyst Report). Pan American Energy LLC is Argentina’s second-largest oil producer and the main supplier of crude to Campana, located in Buenos Aires.

Recently, CNOOC’s bid to acquire the Canadian energy producer Nexen Inc. has successfully cleared one barrier with the approval by the Nexen shareholders. The contract is still subject to the approvals from Canada's industry ministry and from U.S. and European regulators.

The developed world will now be faced with a potent test of accepting Chinese capital that would also mean relinquishing control over strategic resources. Bridas’ purchase of ExxonMobil’s assets is another effort by the Chinese company to capture its hold in foreign energy assets.

CNOOC Ltd. carries a Zacks #4 Rank (short-term Sell rating). Longer term, we maintain our Neutral recommendation.
 

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