PetroChina to buy Petrobras’s Peru assets in $2.6 billion deal

PetroChina Co. Ltd.’s indirect subsidiaries CNPC E&D Holdings Cooperatief UA and CNODC International Holding Ltd. have agreed with Petroleo Brasileiro SA’s wholly owned subsidiaries Petrobras International Braspetro BV and Petrobras De Valores Internacional De Espana SL to buy Petrobras Energia Peru SA for $2.6 billion.

PetroChina stated the purchase will help expand the scale of its oil and gas operations in Latin America and drive the sustainable development of its overseas business.

A wholly owned subsidiary of Petrobras, Petrobras Energia Peru owns assets totaling $1.42 billion with $660 million in net assets, as of yearend 2012. The company’s revenue from core businesses that year was $600 million with $102 million net profit.

Petrobras Energia Peru holds 100% interest in two blocks and 46.16% interest in one block in three of Peru’s oil and gas fields. PetroChina said the blocks combine for an output 800,000 tons/year of oil equivalent, with sizeable recoverable reserves.

CNPC E&D is principally engaged in the exploration, development, production, transmission, and marketing of crude oil and natural gas, with operations in Venezuela, Ecuador, Canada, Algeria, Azerbaijan, Chad, Indonesia, Kazakhstan, Niger, Oman, and China.

PetroChina spoke on its intention to become an international integrated energy company in 2010. Jiang Jiemin, then-chairman of the company, said, “A total investment of not less than $60 billion is needed to form our five regions of global oil and gas cooperation by 2020 (OGJ, April 5, 2010, p. 42).”

China and Venezuela signed several accords in 2008 including an agreement for a joint study with Sinopec regarding the construction of a refinery in Cabruta, northern Venezuela to process heavy crude from the Orinoco heavy crude belt.

The documents also included a contract for the supply of crude and fuel oil between Petroleos de Venezuela SA (PDVSA) and PetroChina along with an agreement for the construction of four oil tankers for CV Shipping, a joint venture between China and Venezuela that formed January of that year.

In May 2008, PetroChina entered into a joint venture agreement with PDVSA to build a 400,000 b/d refinery in Guangdong province, configured to process Venezuelan heavy oil, Chinese state media reported at the time. Venezuelan President Hugo Chavez and Chinese Gen. Sec. Hu Jintao, agreed a year later to move forward the starting date of increased Venezuelan oil exports to the East Asian nation (OGJ Online, April 13, 2009).

PetroChina agreed to buy 3 million bbl/month of oil over a 2-year period from Ecuador’s state-owned Petroecuador that year (OGJ Online, Aug. 10, 2009). Three years later, the company paid $680 million (Can.) for the remaining 40% of Athabasca Oil Sands Corp.’s MacKay River project, making PetroChina 100% owner at a total price of $2.5 billion (OGJ Online, Jan. 16, 2012).

It was the third investment by a Chinese state-owned firm into oil sands projects in Canada at the time. China Petrochemical Corp.’s $4.65 billion paid in 2010 for a 9% stake in Syncrude was the largest. Also in 2010, PetroChina signed a binding agreement to acquire 20% of Royal Dutch Shell PLC's Groundbirch assets in northeastern British Columbia (OGJ Online, Feb. 13, 2012).