The failure of China’s state owned CNOOC oil company to complete a deal to purchase BP’s interest in an Argentine oil company may signal a new level of international worry about Argentine policy. As a Reuters dispatch on the failed transaction notes, China’s regulatory agencies failed to approve the $7 billion purchase.Given the thirst for oil that has sent Chinese firms on a global buying spree trying to secure supplies for their rapidly expanding domestic economy, the failure to follow through is raising some questions. From the Reuters piece:
CNOOC may have developed cold feet over the agreement because of the arbitrary and heavy handed nature of Argentina’s government that has seen Western oil and gas companies exit the country, according to a report from Jefferies Group at the end of October.
Speculation, but a country that brings criminal charges against economists who dispute its (widely mocked) inflation numbers must expect to live and die on rumors. The Chinese are increasingly seasoned and experienced bottom fishers, accustomed to weigh and manage risks in volatile developing countries like Sudan and Zimbabwe. If they think Argentina is too risky, others should probably also beware.