BP's $7 bn stake sale collapses

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The Independent Online

BP's plan to sell a stake in its South American unit for $7bn (£4bn) has collapsed, making it more difficult to raise its payout to shareholders.

China's CNOOC said yesterday its 50 per cent-owned unit Bridas Energy Holdings has terminated a deal to buy BP's stake in the Argentina-based oil and gas group Pan American Energy (PAE).

BP hinted at its third-quarter results last month that it would announce an increase in its dividend in early 2012. However, the failure of the sale of its 60 per cent interest in PAE could mean cash flow is lower than might have been expected, making it harder to raise the dividend.

At the results, BP said the deal, initially signed last November, was not as important to its cash flow today as it was a year ago.

BP will repay a deposit of $3.5bn received for the PAE stake at the end of 2010, which it said will not have an impact on its level of gearing.

BP's planned sale of the stake was intended to help raise funds to pay for the clean-up of its Gulf of Mexico oil spill in 2010. REUTERS