China Negotiates for Deepwater Oil Blocks Offshore Brazil

NEW YORK (Dow Jones Newswires), May 22, 2009

The two oil blocks under negotiation between oil giants China Petroleum & Chemical Corp. (SNP) and Petroleo Brasileiro SA (PBR) are deepwater exploration blocks located in the north of Brazil, the Brazilian company's top financial official told Dow Jones Newswires on Thursday.

Conversations, however, are still ongoing and the deal isn't closed, said Almir Barbassa, chief financial officer of Petrobras, as the Brazilian company is known.

The blocks under consideration are within Brazilian waters, are 100% owned by Petrobras and run deep, or about 2,000 meters, he said. They are located off the coast of the two neighboring states of Para and Maranhao in northern Brazil, Barbassa added.

Earlier this week, China's National Energy Administration Chairman Zhang Guobao told reporters in Beijing that Brazil would offer two oil blocks to Sinopec, as the Chinese company is known, as a way to strengthen energy cooperation between the two countries. He didn't give any further details.

Subsequently, a Petrobras spokeswoman only had denied that the blocks were in Brazil's promising subsalt region.

According to Brazil's Mines and Energy Ministry, any transfer of blocks would be subject to approval by Brazil's National Petroleum Agency, or ANP.

Petrobras and China Development Bank earlier this week unveiled a $10 billion, 10-year financing agreement.  

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