China’s Sinopec and Portugal’s Galp join forces for oil exploration in Brazil

14 November 2011

Lisbon, Portugal, 14 Nov – The China Petroleum & Chemical Corporation (Sinopec) has agreed to take a 30 percent stake in the Brazilian subsidiary of Portuguese oil group Galp Energia, Petrogal Brasil. The operation will be carried out via a capital increase of US$4.8 billion.

As well as this increase, which will be entirely subscribed by Sinopec, the Chinese group will provide a shareholder loan to Petrogal Brasil estimated at US$390 million, which will be used to repay 30 percent of the loans provided by Galp Energia to Petrogal Brasil, which total US$1.3 billion.

In a statement published by the Portuguese stock market regulator, CMVM, the Portuguese group said that after the transaction is carried out, Galp Energia would own 70 percent of Petrogal Brasil and Sinopec the remaining 30 percent.

The Portuguese group also said that the capital increase significantly boosted the capital of Galp Energia, whilst funding the entire expansion and future development of its upstream activities in Brazil.

Galp Energia’s exploration and production portfolio in Brazil includes stakes in 21 projects in seven basins, including discoveries in the pre-salt layer of the Santos basin.

The Sinopec group, in its turn, is the biggest producer of oil and petrochemical products in China and the second-largest in terms of oil production, which in 2010 totalled 298 million barrels, as well as producing 441 billion cubic feet of natural gas.

In 2010, Sinopec took a 40 percent stake in Repsol Brasil, the Brazilian subsidiary of Spanish group Repsol, by subscribing a capital increase of US$7.111 billion. (macauhub)