CNPC looks over Petrobras assets worth US$2b

The state-owned giant could face competition for the South American projects, sources say

PUBLISHED : Friday, 19 July, 2013, 12:00am
UPDATED : Friday, 19 July, 2013, 5:08am

China National Petroleum Corp (CNPC), the country's largest oil producer, is considering buying Petroleo Brasileiro (Petrobras) assets in South America, three people with knowledge of the matter said.

The assets in Colombia and Peru could be worth about US$2 billion and CNPC may face competition from other South American producers, two of the sources said.

Brazilian state-owned Petrobras, the most indebted publicly traded oil company, has been shedding assets to help finance deep-water projects in Brazil. Petrobras sold half its African assets to Brazil's Grupo BTG Pactual for US$1.5 billion last month.

"The move is in line with CNPC's overall strategy to expand its upstream assets globally, as the company tries to grab more assets while crude prices stay relatively stable," Grace Liu, an oil analyst with Guotai Junan Securities said in Shenzhen. "CNPC and PetroChina already own many assets in South America, so adding a few more would not be as risky as venturing into a totally new region."

PetroChina is CNPC's Hong Kong-traded unit.

Rio de Janeiro-based Petrobras declined to comment on the sale of the Peru and Colombia assets. CNPC's Beijing-based spokesman Li Runsheng did not answer two calls to his office.

Petrobras is seeking funds to support its plans to spend US$237 billion by 2017. Investments are set to surge as it develops the ultra-deepwater Libra field, Brazil's largest discovery.

State-owned CNPC announced in March that it would spend US$4.2 billion to buy a stake in Eni's natural gas assets in Mozambique. The Beijing-based producer is also set to pay about US$5 billion to purchase a stake in the Kashagan project from state-backed KazMunaiGaz National in Kazakhstan, people with knowledge of the matter said last month.

Chinese companies would continue to hunt for natural resources assets overseas, especially in so-called frontier markets, JP Morgan Chase's investment banking head for China, Fang Fang, said in Beijing on Wednesday.

Mainland firms purchased about US$28 billion worth of assets abroad in the first half of the year, about the same as in the first half of last year. Deal-making still lags behind 2009, when a record US$37 billion of outbound transactions were struck in the first half.