MADRID - Spanish builder Sacyr Vallehermoso is in talks to sell its 20 percent stake in oil major Repsol YPF to China's Sinopec Corp, Cinco Dias reported on Wednesday.
Both Sacyr and Repsol declined to comment on the report which pushed shares in Repsol higher, despite a downgrade on the Spanish stock by investment bank UBS which has a downbeat outlook for the oil sector.
Sacyr is looking to sell the stake to the Chinese oil giant at 26.7 euros per share, a near 70 percent premium to its market price and the same as offered to Russia's Lukoil (LKOH.MM) in recent dead-end talks, the paper said.
State-owned Sinopec Group is the parent of Sinopec Corp.
Repsol's shares rose as much as 2.9 percent on Wednesday, before losing gains to trade 1.79 percent higher at 15.88 euros at 1100 GMT, compared to a 0.77 percent drop in the European oil and gas sector .SXEP.
One analyst said any Sinopec buy of the stake would be the first large purchase of a foreign firm by the Chinese company.
"Sinopec is looking to boost its reserves, it is looking more for liquids than gas, but this would be the first time it takes on such a large stake in a foreign company," said Boci Group's Lawrence Lau.
Two thirds of Repsol's falling production in the first nine months of 2008 was natural gas, but the company's crude production is expected to increase in the next few years thanks to its interests in deep sea oil fields off the coast of Brazil.
"Repsol will have oil production coming on stream in the next decade and China is a potential market for this," ING analyst Jason Kenney said.
He has a buy stance on Repsol and a 19.3 euro target price on the stock. Sacyr has been looking for a buyer for its Repsol stake to ease its debt burden since September.
However, any deal is far from straightforward given the high asking price, political pressures for potential candidates from the Spanish government and difficulty in obtaining credit for a deal in times of low oil prices, broker BPI said in a note.
UBS cut Repsol YPF's rating to 'neutral' from 'buy' on Wednesday, trimming its target price to 16 euros from 17.5 euros per share.
Both Sacyr and Repsol declined to comment on the report which pushed shares in Repsol higher, despite a downgrade on the Spanish stock by investment bank UBS which has a downbeat outlook for the oil sector.
Sacyr is looking to sell the stake to the Chinese oil giant at 26.7 euros per share, a near 70 percent premium to its market price and the same as offered to Russia's Lukoil (LKOH.MM) in recent dead-end talks, the paper said.
State-owned Sinopec Group is the parent of Sinopec Corp.
Repsol's shares rose as much as 2.9 percent on Wednesday, before losing gains to trade 1.79 percent higher at 15.88 euros at 1100 GMT, compared to a 0.77 percent drop in the European oil and gas sector .SXEP.
One analyst said any Sinopec buy of the stake would be the first large purchase of a foreign firm by the Chinese company.
"Sinopec is looking to boost its reserves, it is looking more for liquids than gas, but this would be the first time it takes on such a large stake in a foreign company," said Boci Group's Lawrence Lau.
Two thirds of Repsol's falling production in the first nine months of 2008 was natural gas, but the company's crude production is expected to increase in the next few years thanks to its interests in deep sea oil fields off the coast of Brazil.
"Repsol will have oil production coming on stream in the next decade and China is a potential market for this," ING analyst Jason Kenney said.
He has a buy stance on Repsol and a 19.3 euro target price on the stock. Sacyr has been looking for a buyer for its Repsol stake to ease its debt burden since September.
However, any deal is far from straightforward given the high asking price, political pressures for potential candidates from the Spanish government and difficulty in obtaining credit for a deal in times of low oil prices, broker BPI said in a note.
UBS cut Repsol YPF's rating to 'neutral' from 'buy' on Wednesday, trimming its target price to 16 euros from 17.5 euros per share.
