China’s thirst for oil and gas is immeasurable. Petrobras’ hunger to reduce its high debt levels is incalculable. The two appetites came together Nov 13 in a $2.6 billion deal in Peru. Brazil’s giant state run oil company agreed to sell Petrobras Energia Peru to PetroChina, the publicly listed arm of China National Petroleum Corp. (CNPC), China’s biggest state-owned oil and gas firm.
The deal reinforces the growing presence of Chinese oil companies in Latin America and suggest that there will be no slowdown in their international expansion despite a domestic corruption investigation into some former PetroChina senior officials. Last month, CNPC and another state-owned Chinese oil company CNOOC took a 10% stake in Brazil’s largest offshore oilfield, Libra, through a consortium led by Petrobras that includes France’s Total and Anglo-Dutch Royal Dutch Shell. PetroChina already has oil and gas assets in Ecuador, Peru and Venezuela.
The latest Peru deal brings PetroChina’s spending on foreign assets this year to $11.8 billion, more than double the total figure for last year, according to the Financial Times. PetroChina’s President Zhou Jiping said last year that he wanted to pick up the pace of the company’s internationalization. His goal was to raise its overseas oil and gas output to 50% of its total production in five to eight years from 2012’s 9%.
The purchase will add 800,000 metric tons of oil a year to PetroChina’s output, which was over 110 million tonnes last year. It will get three production and exploration blocks from Petrobras: Block X, a mature field that has been in operation since 1912 and produced 16,000 barrels per day in 2012; Block 58, an exploratory block next to where significant discoveries of natural gas and condensate have been made recently; and a 46.16% stake in Block 57, a pre-operational natural gas and condensate field operated by Spain’s Repsol.
Petrobras will uses the proceeds from the sale to reduce its huge debt. It has now raised $7.4 billion by selling assets this year. (Read more: Brazil’s Petrobras drills for cash). It is focusing on its domestic on and offshore operations. The the International Energy Agency (IEA) in its newly released annual World Energy Outlook said that the South American country is set to become a net oil exporter and top 10 producer from 2015 if it overcomes hurdles to developing its giant offshore discoveries. CNPC is already the growing presence in international oil markets Petrobras aspires to be.