BP Gets Going In Brazil

BP recently announced that the Brazilian National Petroleum, Natural Gas and Biofuels Agency has approved its bid to purchase ten exploration and production blocks in Brazil from Devon Energy. [1] BP had declared its decision to buy the assets from Devon in March 2010, and had been waiting for the regulatory approvals from ANP since then. [2]


The third largest of the six oil & gas ‘supermajors’, BP competes with oil & gas heavy-weights including Exxon Mobil, Royal Dutch Shell, Chesapeake, Anadarko and Chevron.



The BP-Devon Deal





The $7-billion deal between BP and Devon was for the latter’s assets in Brazil, Azerbaijan and the U.S. deepwater Gulf of Mexico. The assets included exploration blocks in Brazil’s prolific Campos basin, where BP could capitalize on its deepwater mining expertise.



The deal was in-line with the interests of both companies, as BP continues to focus on leveraging the strength of its deepwater operations, while Devon Energy decided to divest its deepwater and international assets in November 2009 to focus on onshore exploration and production in the U.S. and Canada.





Impact of the Deal on BP



The transaction in Azerbaijan was completed in August 2010. [3] BP raised its interest in the Azeri-Chirag-Gunashli development in the Caspian Sea to 39.77% as a result of the deal. BP has been operating the ACG oil field since 1997.

However, the ANP put the deal in Brazil on hold – admittedly to see how BP contains the oil spill in the Gulf of Mexico – and finally cleared it now seeing BP’s response to the world’s largest accidental oil spill.



With the Brazilian deepwaters showing a lot of promise in terms of oil & gas reserves, BP’s exploration in the area is expected to primarily add to the company’s oil production capacity in the years to come.