China State Oil Companies To Invest In Petrobras’ Brazilian Projects

Courtesy of The Wall Street Journal, a report that Petróleo Brasileiro SA is prepared to have Chinese state-owned oil companies invest in its oil exploration and production projects in Brazil.  As the article notes:

“…The state-run Brazilian oil company is open to such a move as part of a package deal involving $10 billion in Chinese financing for Petrobras announced in February.

Petrobras also is in talks with four Chinese companies on how much crude oil the Brazilian company would supply as part of a credit-for-oil deal, the person said. The deal is expected to be announced by next week when Brazilian President Luiz Inacio Lula da Silva visits China.

In February, Brazil and China agreed on a framework for the loan and oil supplies, and details are now being worked out. If a final agreement is hammered out, it would be one of a string of similar deals Beijing has struck with energy producers world-wide in recent months, including billion-dollar deals with Kazakhstan and Russia.

As part of the Brazil-China talks in February, Petrobras agreed to sell China Petrochemical Corp., known as Sinopec, 60,000 to 100,000 barrels a day of heavy crude oil, equivalent to around 5% of Petrobras’ daily output.

The discussions have now been expanded to include possible sales of up to 200,000 barrels a day, with other Chinese companies brought into the equation. Financial terms of the loan and oil sales are still being worked out, but both have a 10-year term, the person said.

The four Chinese companies in the talks to buy between 100,000 and 200,000 barrels a day of heavy crude are PetroChina Co.’s unit Chinaoil; Sinopec’s unit Unipec; Sinochem Corp.; and Zhuhai Zhenrong, the person said. The companies weren’t available to comment.

Petrobras needs the money for the exploitation of big oil and gas discoveries off Brazil’s coast, which could turn Brazil into a major oil exporter. The company has said it will spend $28 billion through 2013 to explore and drill in the deep-water fields.

Following the recent oil and gas discoveries off Brazil’s coast, the government suspended auctions of exploration rights in those areas, essentially blocking investment by foreign companies. Petrobras was then left to find ways to finance the exploration costs.

Brazil’s President da Silva, who will have Petrobras Chief Executive Jose Sergio Gabrielli with him during a three-day visit to China starting Monday, is expected to sign a range of agreements with his Chinese counterpart Hu Jintao.”

This entry was posted on Thursday, May 14th, 2009 at 1:01 pm and is filed under Brazil, China, Petroleo Brasileiro, Sinopec.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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