China’s Sinopec Group, aiming to increase its presence in Brazil, agreed to acquire a 30% stake in the Brazilian unit of Galp Energia SGPS SA for $5.18 billion.
Closing remains subject to approval by the Chinese government. Terms of the agreement call for Sinopec to acquire Galp board seats.
Galp subsidiaries Petrogal Brasil and Galp Brazil Services will issue new shares equivalent to 30% of the enlarged shareholder base, which Sinopec will purchase for $4.8 billion. The state firm will pay an additional $390 million to cover debt.
Galp’s primary assets in Brazil include four deepwater blocks: BM-S-11, BM-S-24, BM-S-8 and BM-S-21 in the Santos basin, Sinopec said.
Analyst Juliet Kerr of IHS Global Insight said the partnership with Sinopec will help Galp Energia finance its share of development costs related to the Tupi, Cernambi, and Iara presalt projects in Brazil in which it participates.
But Kerr noted that the agreement will mark a “significant” boost to Sinopec’s standing in Brazil’s oil and gas industry, especially following its earlier purchase of stakes in the sector from Repsol YPF SA.
The agreement marks the latest in a series of purchases by Chinese companies in Brazil’s offshore oil fields.
Sinopec paid $7.1 billion for a stake in Repsol’s Brazilian assets. Sinochem’s acquired a $3.1 billion stake in Peregrino oil field from Statoil.
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