Combines second-largest Argentinian producer and major refiner

BP (ticker: BP) announced the formation of a new joint venture with Bridas Corporation, creating the largest privately-owned integrated energy company in Argentina.

The JV is a combination of two subsidiaries, Pan American Energy (PAE) and Axion Energy into the Pan American Energy Group (PAEG). BP and Bridas will each hold a 50% stake in the combined company.

Pan American Energy is already a BP-Bridas JV

Formed in 1997, Pan American Energy is the second-largest oil and gas producer in Argentina behind only YPF. The company produced an average of 262 MBOEPD in 2016, 18% of Argentina’s total production, and has 1.56 billion BOE of reserves. PAE is itself a joint venture between BP and Bridas, with BP holding 60% and Bridas holding 40%.

Axion is a refining and marketing company that operates the Campana refinery, located north of Buenos Aires. With about 90 MBOPD of refining capacity, Axion is the primary offtaker of PAE’s production. In addition, Axion has a network of fuel retail sites giving it a 15% share of Argentina’s fuel retail market. Axion is currently wholly owned by Bridas, and was acquired from ExxonMobil in 2012.

The Bridas Corporation was formed 69 years ago as an importer and provider of oil services, and has since expanded in the oil and gas business. 50% of the company is owned by CNOOC, which acquired its stake in 2010.

According to BP, the joint venture will yield significant synergy possibilities. Axion is already the primary customer of PAE, so integration is possible. Bob Dudley, BP Group Chief Executive commented on these opportunities, saying “Supported by the combined skills and expertise of BP and Bridas, this new integrated business will be able to 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.”

No payments will be made to either party in the formation of the venture. PAEG’s board will be composed of four directors from each shareholder, and will be self-funded. BP anticipates the venture will be completed in early 2018.

Legal Notice