S&P puts Oleoducto de Crudos Pesados on developing watch

Standard & Poor's said it placed its BBB rating on Oleoducto de Crudos Pesados' $900 million senior bank loan on CreditWatch with developing implications.

The CreditWatch listing follows EnCana Corp.'s (A-/negative) decision to sell all of its shares in subsidiaries that have oil and pipeline interests in Ecuador, including those in Oleoducto de Crudos Pesados, to Andes Petroleum Co., a joint venture of China Petroleum & Chemical Corp. (BBB/stable) and China National Petroleum Corp.

The sale is expected to have an effective date of July 1, 2005, and the closing of the deal is pending approval by the Government of Ecuador.

The rating action reflects the uncertainty on the credit quality of the new shipper and on the kind and type of guarantee that could be provided, the agency said. EnCana has the largest sponsor participation in Oleoducto de Crudos Pesados, thus the credit quality provided by Andes is of great relevance.

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