China Petrochemical Corp., the country’s second-largest oil
and gas producer, will invest $7.1 billion inRepsol YPF SA’s Brazilian
unit as the Spanish oil company raises funds to develop offshore projects.
Sinopec Group, as the company is known, will buy new shares
in the Brazilian unit and will hold 40 percent of that division after the
capital increase, Madrid-based Repsol said today in an e-mailed statement. Shares
in Repsol, which previously planned an initial public offering of the unit,
jumped in Madrid.
The acquisition is the second-largest overseas purchase by a
Chinese company as the nation snaps up fields to meet surging fuel demand in
the world’s biggest energy consumer. Repsol has stakes in blocks in Brazil’s
Santos, Campos and Espirito Santo basins, and has said it plans to invest as
much as $14 billion through 2019.
The valuation of the transaction announced today is
“surprisingly high,” Banco BPI SA analysts Bruno Silva, Flora Trindade and
Gonzalo Sanchez-Bordona wrote in a research note. They have a “buy/accumulate” rating
on Repsol shares.
Repsol climbed as much as 8.5 percent to 20.50 euros in
Madrid, and traded at 19.92 euros as of 10:32 a.m. in the Spanish capital.
Addax Purchase
Sinopec Group’s investment in Repsol’s Brazilian unit is
China’s largest overseas oil deal since the C$8.3 billion ($8 billion) purchase
ofAddax Petroleum Corp.Sinopec GroupboughtAddax last
year to gain oil reserves in Iraq’s Kurdistan and West Africa.
Cnooc Ltd.,China’s biggest offshore oil explorer,
agreed in March to buy a 50 percent stake in Argentine producer Bridas Corp.
for $3.1 billion to meet demand in the world’s fastest- growing major economy.PetroChina
Co.in December won approval from the Canadian government to buy a stake
in two Alberta oil- sands projects for C$1.9 billion.
Statoil ASA, Norway’s largest oil and natural gas company,
in May agreed to sell a 40 percent stake in the Brazilian offshore Peregrino
field to China’s Sinochem Group for $3.07 billion in cash.
Brazilian Business
Spain’s biggest oil company had also considered a plan to
sell about 40 percent of the Brazilian business through an initial public
offering. Repsol now will not be selling shares in the Brazilian unit to the
public, Madrid-based spokesman Kristian Rix said today.
Since 2007, Repsol and partnersBG Group Plcand
Brazil’sPetroleo Brasileiro SAhave found hydrocarbons in the
offshore Carioca, Guara and Iguacu fields in the Santos Basin’s BM-S-9 block. These
are ultra-deep deposits beneath a salt layer under the seabed.
Petrobras, as the Brazilian company is known, estimated in
November 2007 that the Santos Basin’s pre-salt Tupi field may contain as many
as 8 billion barrels of oil, the largest find in the Americas since Mexico’s
Cantarell field in 1976. Repsol doesn’t own a stake in Tupi.
Repsol wants to invest in exploration inBrazil’s
offshore Santos Basin and elsewhere to increase reserves and output, while
trying to reduce exposure to mature fields inArgentina. The company
forecasts annual production growth of as much as 4 percent through 2014 as
projects in Brazil and Peru come on stream. Repsol plans to invest a total of
28.5 billion euros in the period.
Argentine Unit
Oil and gas production at Repsol’s upstream division, which
doesn’t include Argentine unit YPF, was unchanged from a year earlier at
340,000 barrels of oil equivalent a day in the second quarter. Output from
Buenos Aires-based YPF, of which Repsol owns 84 percent, fell 7 percent to
556,000 barrels a day as fields matured.
The Spanish company wants to sell part of its holding in YPF
“sooner rather than later,” Chief Executive OfficerAntonio Brufausaid
on April 29. In 2008 Repsol delayed a public offering of a stake in YPF.