CHINESE GIANTS FOCUSED ON YPF S.A. - THE ARGENTINE BRANCH OF SPANISH REPSOL

YPF Sociedad Anonima, the Argentine branch of REPSOL, the Spanish oil & gas company, is in the focus of the Chinese CNPC (China National Petroleum Corp.) interested to remain with 75% of YPF ($17 billion). At the same time, China National Offshore Oil Company Limited (CNOOC) shows strong interest for 25% rest. The negotiations with the Spanish group are in very preliminary phase. If the acquisition is approved, it will make a record in China's crude assets trade history. YPF is engaged in both, downstream and upstream business. Its broad activities include the exploration, development and production of oil, natural gas and liquid petroleum gas and the refining, transportation, marketing and distribution of oil, petroleum products and derivatives, petrochemicals, bio-fuels, and liquid petroleum gas.

REPSOL has confirmed that there were contacts and proposals of a different nature and from different companies interested in its Argentine branch. In fact, back in April 2008 CNPC and REPSOL YPF already had similar contacts. Even more, SINOPEC, another Chinese oil and gas giant company, shown great interest for 20% of REPSOL, during the last January. YPF has a great value and importance at this moment because of a several very different reasons. Argentina has a special relation with China and, also, the shareholders of REPSOL need liquidity. REPSOL, that has a 84% of YPF, has been trying to sell a part of its participation in the Argentine company. It was even in consideration to launch a public sale offer over 20% of the owned capital.

Obviously, there is a strong competition and tension between CNPC and SINOPEC and some kind of a race on the foreign markets between the Chinese oil giants, especially pushed by lower crude prices and overseas oil companies needing cash. Only a few weeks ago SINOPEC decided to buy Swiss ADDAX PETROLEUM ($7.2 billion) while the last week MARATHON OIL CORPORATION announced the sale of its 20% share in the "Block 32" offshore in Angola for $1.3 billion to CNOOC and SINOPEC. Chinese Government has to assure oil and gas supply of its emerging national economy. China is the second largest energy consumer in the World. Nearly half of its requirements is imported while the national oil consumption is growing around 5 % annually.

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YPF REPSOL http://www.repsol.com/
REPSOL http://www.repsol.com/
CNPC http://www.cnpc.com.cn/en/
SINOPEC http://www.sinopec.com/

CNOOC http://www.cnoocltd.com/