Chinese Trying to Buy Stakes of an OGX Play at the Santos Basin

New Wave Media

September 27, 2010



China Petrochemical (Sinopec) and the Chinese national oil company (CNOOC) are holding separate negotiations with OGX Petroleo e Gás in order to acquire 20% of an OGX deepwater play at the Santos Basin. In general we can see a marked increase in Chinese involvement and investments in Brazil.

These negotiations are the most recent effort of Chinese oil companies in Latin America. Normally Chinese oil investments are driven to Asia, the Middle East and Africa, regions that historically concentrate the majority of Chinese imports in energy sources and raw material.
As recently as May of this year, Sinochem Group, China’s biggest chemicals trader, agreed yesterday to pay $3 billion to Statoil ASA for 40 percent of the Brazilian offshore Peregrino field. The companies also agreed to jointly seek more opportunities in Brazil and elsewhere. This was the first important Chinese investment in the Brazilian O&G market, although not with a fully Brazilian company such as OGX.
Chinese state-owned companies, including PetroChina Co., last year spent a record $32 billion on energy and mining acquisitions to meet rising resources demand in the Chinese market, which is the world’s fastest-growing major economy. Last year the Chinese had already bought stakes from MMX mining, which along with OGX Petroleo and Gás, belongs to the EBX group owned by Brazilian entrepreneur Eike Batista, considered to be the 8 richest man in the world.
OGX is also looking to sell as much as 30% of its shallow water offshore oil discoveries at the via farm-out deals. Six international companies have shown interest in doing business. These include Sinopec, PetroChina, ExxonMobil, Chevron, Statoil and an undisclosed Indian oil company.
In September 2009, drilling on the block BM-C-43, located in the Campos Basin, signaled the beginning of the drilling campaign on OGX owned and operated blocks. The drilling activities are still in progress, representing a cycle of big discoveries for the company in the Campos, Santos and Parnaiba Basins. As a consequence, five of the six drilling rigs that OGX has contracted are now in operation. Until 2013, OGX will have drilled 79 wells in its five Brazilian sedimentary basins. Up to now OGX has had  nearly 100% success in its offshore drilling program, with only on dry well drilled at the Santos Basin, all wells drilled at their shallow water Campos Basin blocks have delivered substantial hydrocarbon reserves, to the point that some believe they have uncovered a large sub-basin within the southern part of the Campos Basin.
Everything point to the likely probability that the Chinese will be increasing their investments in Brazil, more specifically in O&G, Mining and Shipbuilding in the coming years. For Brazil this investment will be quite welcome as major investment capital will be necessary to undertake and maintain the expected growth in these industrial areas. Chinese investment banks are also participating by partially financing certain some of the O&G exploration currently going on in Brazil.
Claudio Paschoa
photo courtesy of ARKex
Paschoa, Claudio
Claudio Paschoa is Marine Technology Reporter's correspondent in Brazil.
Marine Technology Magazine Cover Oct 2020 -

Marine Technology Reporter is the world's largest audited subsea industry publication serving the offshore energy, subsea defense and scientific communities.

Marine Technology ENews subscription

Marine Technology ENews is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

Subscribe for MTR E-news