China's state-owned oil company has signed a $3.54bn deal with Portuguese firm Galp Energia.
China Petrochemical Group (Sinopec) has made another venture into the growing South American energy industry by agreeing to pay $3.54 billion (22.5bn yuan) for a 30% stake in Galp Energia's deep-sea oil assets in Brazil.
The deal comes just one year after Sinopec purchased a 40% stake in Repsol's Brazil division for $7 billion (44.5bn yuan). Galp's primary assets in Brazil include four deep-water blocks of BM-S-11, BM-S-24, BM-S-8 and BM-S-21, from which Sinopec expects to receive 21,300 barrels of oil equivalent per day (boedp) by 2015, which would then peak at 112,500 boedp by 2024.
Many Chinese energy firms are keen to expand production capacity abroad as traditional domestic upstream oil and gas sectors do not offer many opportunities for growth, according to industry analyst Yan Shi. Nonetheless, China's outbound mergers and acquisitions are down this year to $37.6 billion (239bn yuan) from $54.1 billion (344bn yuan) last year, according to data collected by Thomson Reuters.
The influx of capital will also help Galp Energia finance the development of deep-water oil fields in Brazil's 'subsalt' region, which is the site of the largest oil discovery in the Americas in the last 30 years. Furthermore, the cash will help strengthen Galp Energia's capital structure, allowing it to ensure future expansion of its upstream activities.
In a busy month for Sinopec, the Chinese state-owned oil giant has also recently completed a purchase of an 80% stake in a Cameroonian oil firm for $538 million (3.4bn yuan).