Sinopec, CNOOC to bid $7-bn for stake in Brazilian oil assets of OGX

Chinese oil majors, Sinopec and CNOOC Ltd are reportedly gearing up to make a $7-billion bid for stakes in oil assets of OGX Petroleo & Gas, a company controlled by Brazilian billionaire Eike Batista. 

Reuters yesterday reported that Rio de Janeiro-based OGX, is mulling to sell stakes in some of its oil blocks after making a string of hydrocarbon finds in recent months.

Citing unnamed sources, Reuters said that Sinopec and CNOOC were likely to launch a joint bid, but the final valuation of any deal is still being debated.

OGX, the largest private oil and gas exploring company in Brazil, has a diversified, high-potential portfolio, comprised of 29 exploratory blocks in the Campos, Santos, Espírito Santo, Pará-Maranhão and Parnaíba Basins, in Brazil, and five exploratory blocks in Colombia, Middle Magdalena Valley, Lower Magdalena Valley and Cesar-Ranchería basins.

OGX, which explores for oil in collaboration with Copenhagen-based A P Moller-Maersk Group, has made a series of crude oil discoveries this year and its potential reserves have gone up to 3.69 billion barrels.

Both Chinese companies had started talks with OGX in early August, but at that time, they were looking to buy a 20 per cent stake in one of OGX's offshore oil field.

This is not the first time that Chinese companies are dealing with Batista as the billionaire had sold a 21.52-per cent stake in his mining company MMX to China's third-largest steel producer Wuhan Iron and Steel Group for $400 million in December 2009. (See: China's WISCO to invest $400 million in Brazilian iron ore miner MMX) 

Sinochem already operates in Brazil through its 40-per cent stake in Norway's Statoil-owned Brazilian offshore Peregrino oilfield, which it had acquired in May 2010 for $3 billion. (See: Sinochem acquires 40-per cent stake in Statoil's Brazilian oilfield for $3 billion)