Sinopec, Petrobras To Sign Crude Oil Supply Deal In Brazil

BEIJING (Dow Jones)--China Petrochemical Corp. will sign a package of agreements, including a crude oil purchase deal, with Petroleo Brasileiro SA (PBR) or Petrobras, during Chinese president Hu Jintao's visit to Brazil, a Sinopec Group official said Thursday.




The president of Sinopec Group, Su Shulin, is now in Brazil with several representatives from group subsidiaries, Sinopec spokesman Huang Wensheng told Dow Jones Newswires.



"The crude oil purchase deal is to be signed between Petrobras and our listed company, China Petroleum & Chemical Corp. (SNP)."



He declined to elaborate on the crude oil supply volume or details on the other agreements.



The new supply agreement will build on a previous oil pact the two companies signed last May, under which Petrobras is to supply crude oil to Sinopec for 10 years, with 150,000 barrels of crude a day for the first year and 200,000 barrels a day over the next nine years.



In the first two months of 2010, China imported an average of 186,000 barrels a day of crude oil from Brazil, according to Chinese government data.



On March 31, Brazilian Vice Minister for Energy and High Technology Andre Amado had said Petrobras was in talks with Chinese companies and hoped to finalize energy agreements in time for Hu's visit to Brazil in mid-April.



It isn't clear whether a new loan will be in place for the deal, but Petrobras officials met China Development Bank officials at the end of last month in Beijing.



State-owned CDB has been involved in several credit-energy agreements that Chinese oil companies have signed with different countries in the past year, including a $10 billion loan for Petrobras in May 2009.



Meanwhile, Sinopec and Petrobras have agreed to jointly invest in two deepwater blocks in offshore northern Brazil owned by Petrobras, an executive with the Brazilian company said.

This could possibly be included in the package, but the official, who declined to be named, couldn't confirm it.

The two blocks aren't in Brazil's promising subsalt region, where major oil deposits have been found.