Sinopec, China's largest oil refiner, is in talks with Repsol to buy an Argentinean oil firm. [File photo]

Word on the street is that China's largest oil refiner Sinopec has reached a preliminary agreement to acquire Argentinean oil company YPF from Spanish Repsol, a deal estimated to be worth over US$15 billion.

YPF is the largest oil company in Argentina, with 57.4 percent owned by Repsol and partly owned by Sinopec.

Huang Wensheng, a spokesman for Sinopec said he had no knowledge of this and declined to comment.

A former senior official with Sinopec on condition of anonymity said that Sinopec has always been looking into investment opportunities in Argentina and were preparing to buy local assets.

"The rumored deal is quite possible, but the time has not yet come to announce it," he said.

A senior industrial analyst said China Development Bank may grant subsidies to facilitate the deal.

"Argentina has plenty natural resources, but relatively little cooperation with international oil companies, leaving much potential to tap into," he said. "Yet, considering that the Argentinean policies for oil companies always swing back and forth, Sinopec's purchase of YPF will be a risky investment."

Yuan Xuezhi, an energy researcher at the consultancy firm CIConsulting, said the largest risk of the deal may come from the Argentinian government's attempt to seize control of YPF. "If that happens, the assets Sinopec bought will decline sharply," he said.

Analysts estimate that the purchasing sum will be anywhere between US$16-18 billion, which would make the deal the most expensive ever in terms of Chinese overseas acquisitions.

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