Sinopec in deal to buy oil assets
Source: Agencies |
October 3, 2010, Sunday
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Print Edition
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SINOPEC Group has said it plans to buy 40 percent of Repsol's deepwater oil assets in Brazil for US$7.1 billion as the Asian giant expands its presence in resource-rich South America.
Sinopec announced the agreement on Friday, just two days before Brazilians go to the polls to elect a new president. Dilma Rousseff is widely forecast to win the election.
The deal would help Repsol Brasil, a unit of Spain's largest oil company, develop costly subsalt deposits that were discovered in 2007 and comprise one of the world's biggest petroleum frontiers. Experts believe the vast subsalt area may hold 50 billion barrels of crude.
"Oil demand should grow, with the global economy recovering in the coming years," said Erick Scott, an analyst at Sao Paulo-based brokerage SLW. "Brazil is one of the countries with the most potential for growth."
A Sinopec official said: "It's a large-scale asset of premium quality and potentially with more discoveries to be made in the future."
Sinopec is also bidding for oil and gas assets of Brazilian startup firm OGX worth a potential US$7 billion, sources said last month.
A source at OGX, controlled by billionaire Eike Batista, said the deal with Repsol has no effect on negotiations with potential buyers for assets in the Campos basin, where most of Brazil's oil output comes from.
"One thing has nothing to do with the other. We should have something on that soon," the source said.
Repsol Brasil had filed to sell shares in an initial public offering in Sao Paulo, but with the Sinopec deal, the IPO has been canceled, said Miguel Martinez, chief operating officer of Repsol.
With stakes in 16 offshore exploratory blocks, the company has had seven discoveries so far, all of them in the Santos basin off the coast of Sao Paulo. Repsol Brasil's stakes give the company control over reserves of 1.16 billion barrels of oil equivalent (BOE) from the discoveries, according to an IPO prospectus.
Sinopec announced the agreement on Friday, just two days before Brazilians go to the polls to elect a new president. Dilma Rousseff is widely forecast to win the election.
The deal would help Repsol Brasil, a unit of Spain's largest oil company, develop costly subsalt deposits that were discovered in 2007 and comprise one of the world's biggest petroleum frontiers. Experts believe the vast subsalt area may hold 50 billion barrels of crude.
"Oil demand should grow, with the global economy recovering in the coming years," said Erick Scott, an analyst at Sao Paulo-based brokerage SLW. "Brazil is one of the countries with the most potential for growth."
A Sinopec official said: "It's a large-scale asset of premium quality and potentially with more discoveries to be made in the future."
Sinopec is also bidding for oil and gas assets of Brazilian startup firm OGX worth a potential US$7 billion, sources said last month.
A source at OGX, controlled by billionaire Eike Batista, said the deal with Repsol has no effect on negotiations with potential buyers for assets in the Campos basin, where most of Brazil's oil output comes from.
"One thing has nothing to do with the other. We should have something on that soon," the source said.
Repsol Brasil had filed to sell shares in an initial public offering in Sao Paulo, but with the Sinopec deal, the IPO has been canceled, said Miguel Martinez, chief operating officer of Repsol.
With stakes in 16 offshore exploratory blocks, the company has had seven discoveries so far, all of them in the Santos basin off the coast of Sao Paulo. Repsol Brasil's stakes give the company control over reserves of 1.16 billion barrels of oil equivalent (BOE) from the discoveries, according to an IPO prospectus.
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