BP, Bridas to Merge PAE–Axion, Forming New Energy Company

BP PLC has agreed to form a new integrated energy company operating in Argentina in a deal with Bridas Corporation (Bridas).

BP and Bridas are to combine 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.

PAE is Argentina’s second largest producer of oil and gas, with producing 262,000 barrels of oil daily, while Axion Energy owns and operates the 90,000 barrels of oil a day (b/d) refining capacity Campana refinery north of Buenos Aires, has over 750 retail sites in Argentina, Uruguay and Paraguay, and also has material lubricant and aviation fuels businesses.

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. Bridas itself is a 50:50 joint venture of Bridas Energy Holdings of Argentina and CNOOC Limited of China.

PAE is currently owned 60 percent by BP and 40 percent by Bridas, while Axion is wholly-owned by Bridas.

The transaction is anticipated for completion in early 2018. 

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.

“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,” said Bob Dudley, BP Group chief executive.

“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,” added Dudley.

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

“This integration agreement ratifies our commitment to investment, employment and the efficient development of resources our region needs,” added Marcos Bulgheroni, executive director at Pan American Energy.