BEIJING, Sept 2 (Reuters) - Sinopec International Petroleum and Production Corp, a subsidiary of Sinopec Corp, said losses from its Argentina unit could be “greatly reduced” or the project may swing to profit if oil prices rose.
The comment came after Chinese media reported that Sinopec cash flow was a negative 2.9 billion by the end of 2015, citing an internal audit report.
The project’s net present value, based on current and future cash flows and the $60 barrel-per-day crude price, stood at negative $2.5 billion, Caixin reported on Aug. 31.
In response, Sinopec said the project’s future cash flow should be higher using a different valuation model.
The oil giant bought Occidental’s Argentina unit for $2.45 billion in 2010, marking its first foray into the upstream market in the Latin America country.
“After the acquisition, Argentina’s worsening economic conditions as well as challenges from social stability and public security has weighed on our operation in the country,” Sinopec said in a statement.
Sources told Reuters that Sinopec had considered divesting the investment in 2015. (Reporting by Meng Meng and Josephine Mason; Editing by Gopakumar Warrier)