Sinopec and Petrobras collaborate to develop offshore Brazilian blocks!! Petrobras plans $224 billion investment through 2014.

Sinopec will team up with Petrobras to develop offshore areas of the Para-Maranhao basin in northern Brazil after negotiating for a year. Petrobras is planning to invest $224 billion in the five years through 2014, the largest spending plan of any oil company, to increase oil and gasoline output. “Petrobras is seeking international partners because as its production is expected to double in the next 10 years to reach 4 million barrels per day", said Petrobras’ CEO Gabrielli. He said Petrobras' strategic planning foresees the order of 169 platforms, 504 support vessels, 53 drills and 48 oil tankers until 2020.

Source: Global E&P Transactions 2010 Review

In 2010, Petrobras announced a preliminary agreement to sell stakes in two blocks, BM-PAMA-3 and BM-PAMA-4, to Sinopec. Last October, Sinopec made an entry into Brazil by acquiring 40% interest in Repsol’s Brazilian business for $7.1 billion. “Sinopec is keen to expand its overseas oil and natural-gas operations”, said Sinopec President Wang Tianpu. The keenness is justified by the following snapshot.

Source: Derrick Petroleum E&P Transactions Database

South America- the new playground for Chinese!!

The 2010 M&A activity in South America took a gigantic step by clinching deals worth $36.1 billion, a 91% increase from 2009 value of $3.2 billion. South America accounted for 17% of the total 2010 M&A value of $211 billion and was ranked the second largest region globally for the M&A activity. Brazil was the top country with several large sized transactions totalling $16 billion. 10 transactions were recorded above $1 billion, with Chinese oil and gas companies involved in five of these worth $23 billion in total.

Brazil needs fund and China needs oil & gas resources to meet the growing demand. Here ends the story - Robust Collaboration between Sinopec and Petrobras. Expecting an even more aggressive activity from South America in 2011!

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Brazil - sitting on a gold-mine of oil and gas reserves!!!!!

In a dynamic industry such as oil & gas, the recent discoveries in the presalt layers off Brazil could rank as the biggest in the world in several decades. Due to these significant discoveries, the Brazilian government has been grappling with how to structure and regulate exploration, drilling, and the potential for a large influx of foreign investment.

What is pre-salt?

• The pre-salt region is located approximately 170 miles off the coast of Brazil in the Atlantic Ocean. The region likely ranges from Espírito Santo to Santa Catarina State, measuring 497 miles in length and 124 miles in width.
• The region is named “pre-salt” because the oil is held beneath deep and ultra-deep waters, around 3,000 meters of sand and rock, and an additional layer of salt that, in places, reaches thicknesses of over 2,000 meters, making extraction challenging.

 …. tip of an iceberg!!

Over the span of 10 to 15 years, the industry’s deepwater capabilities has progressed manifold along with the realization that the largest prospects lay in deeper and deeper waters. The string of discoveries in the pre-salt region have proven the same.

• In 2006, Petrobras discovered the Tupi field in the Santos Basin which holds estimated reserves of about 5 to 8 billion barrels.
• In September 2010, the Brazilian Government announced the discovery of the Libra field which is said to be largest oil field discovered anywhere in the world since the enormous Kashagan find (over 17 billion barrels) in Kazakstan in 2000.
• Devon Energy, which holds 6 exploration blocks in the pre-salt, announced an discovery in the Campos Basin , quite close to the Jubarte field.
• The  Petrobras as operator and 45% owner, has made an important discovery of very light oil in the ultra-deep waters of the Santos Basin.
• Maersk Oil has discovered oil in the offshore Campos Basin in a license jointly owned with the Brazilian independent OGX.

Source: Derrick Petroleum Planned Exploration Wells Database

As a result of recent major discoveries, oil and natural gas potential reserves in Brazil are now recognized as some of the largest in the world. . Hence, many foreign players are ready to dip their toes in the waters off Brazil.

Source: Derrick Petroleum E&P Transactions Database

The combination of vast untapped potential oil and natural gas resources with a favorable regulatory framework positions Brazil as one of the most attractive petroleum regions in the world today.