China National Petroleum Corp. has agreed to buy Brazilian state-controlled Petrobras’ oil and gas exploration and production assets in Peru for $2.6 billion, indicating that the go-global message to China’s state-owned enterprises has been affirmed by the country's leaders.
The deal, which is the first offshore Chinese acquisition since the long-awaited third plenary session of the Chinese Communist Party's Central Committee ended earlier this week, allows CNPC to further diversify its oil and gas reserves after it agreed in March to pay $4.2 billion for a 20% stake in a Mozambican offshore natural gas field.
Chinese offshore acquisitions -- which can generate huge fees for banks -- slowed earlier this year amid a reshuffle of China's top leadership. But in recent weeks, there has been an uptick. For example, China Construction Bank bought Brazil’s Banco Industrial e Comercial (BicBanco) in October for about $730 million in cash.
Observers note that CNPC's latest acquisition comes as bilateral ties between China and Peru warm, after Chinese president Xi Jinping held talks with his Peruvian counterpart Ollanta Humala Tasso in April, and see it as part of a broader trend.
“We have seen a closer relationship between China and Latin American countries recently, which partly explains why Chinese oil and gas companies are buying assets in Latin America,” said Hallam Chow, an oil and gas partner at international law firm White and Case.
CNPC, China’s largest integrated energy company, is acquiring three blocks of oil and gas assets in Peru, including a 100% stake in two blocks, and a 46.1% stake in a third block shared with Spanish oil and gas company Repsol.
CNPC is the state-owned parent of publicly-listed PetroChina. The acquisition vehicles are indirect subsidiaries of Petrochina and the deal is expected to close by early 2014. Citi was sole advisor to Petrobras in the sale.
