Petrobras, Sinopec Discuss China's Entry into Brazil's Oil Exploration

RIO DE JANEIRO (Dow Jones Newswires), May 28, 2009

Brazilian state-run energy giant Petrobras (PBR) and China Petroleum & Chemical Corp. (SNP) are in talks to explore oil and natural gas concessions off the coast of Brazil, Petrobras' exploration director said Thursday.

Quoted by the local Estado news agency, Petrobras' Guilherme Estrella said that the blocks were located off the country's equatorial coast between Amapa and Ceara states. The blocks wouldn't include any concessions in the subsalt region.

"It's an attractive area from the geologic point of view," Estrella said on the sidelines of an event in Rio de Janeiro.

The two companies would explore the concessions and divide the risks, Estrella said. So far, the companies are still in negotiations and no formal agreement has been concluded.

Last week, Petrobras CFO Almir Barbassa told Dow Jones Newswires that the blocks under consideration were within Brazilian waters, 100% owned by Petrobras and considered deepwater blocks of about 2,000 meters. The blocks are located off the coast of the two neighboring states of Para and Maranhao in northern Brazil, Barbassa added.

The entry of Sinopec, as the Chinese company is known, into Brazil's oil exploration sector comes after the company agreed to an oil-supply deal with Petrobras earlier this month. The deal was signed during Brazilian President Luiz Inacio Lula da Silva's official visit to China.

At the time, China's National Energy Administration Chairman Zhang Guobao told reporters in Beijing that Brazil would offer two oil field blocks to Sinopec to strengthen energy cooperation between the two countries. He didn't give any further details about the blocks.  

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