The nationalisation by Argentina of Spanish controlled oil company YPF has reportedly blocked long time hopes by China’s Sinopec of buying YPF.
The Financial Times reported Spain’s Repsol had been talking with the Chinese state owned firm for years about a sale of YPF and a Chinese financial website quoted a source as saying they were very close to a deal.
Argentina is taking over the company because is says Repsol did not invest enough to boost production.
Argentina exports a third of its oil to the US, a third to Chile and 27 percent to China, but because of a lack of refineries has to import fuel.
The government wants to boost crude production to meet growing domestic demand.
It is unlikely that any deal could now be done to sell YPF assets to Sinopec as that would mean Buenos Aires reversing its nationalisation decision.
Analysts see the Chinese now focusing on Brazil, where the political landscape is more stable and open to foreign investors.
Argentina may have YPC but it does not have the billions needed to invest in extracting oil and with the nationalisation is likely to have scared away foreign investors who do have that sort of money.