Repsol SA, fighting to keep its investment-grade rating, received government approval to sell a business in Ecuador to China Petroleum & Chemical Corp. as part of a 4.5 billion-euro ($5.5 billion) divestment program.
Repsol plans to dispose of Amodaimi Oil Co., a wholly-owned subsidiary, to the Chinese company known as Sinopec, it said in a statement in Madrid today. Amodaimi holds a 20 percent share of block 16 and Tivacuno service contracts. Repsol will still remain operator of the blocks with a 35 percent stake if the deal goes through.
Repsol is trying to recover from the Argentine government seizing its YPF business in April, which prompted ratings agencies to cut the company to one level above junk. Repsol sold a Chilean unit last week for about $540 million to reduce the company’s debt.
The 1.85 billion euros of assets sold so far “aim to improve the financial structure of the group,” Repsol said in the statement.
Kristian Rix, a spokesman for Repsol, said receiving government approval is the first step for the sale of the business in Ecuador. The company declined to give a price for the asset.