Sinopec to pay $3.54 bn for 30% of Galp Energia’s Brazilian deep-sea oil asset

China Petrochemical Corp, known as Sinopec Group today agreed to acquire a 30-per cent stake in Portuguese oil firm Galp Energia's deep-sea oil asset in Brazil, for $3.54 billion.

In China's largest overseas acquisition this year, Sinopec will subscribe a $4.8 billion capital increase in Petrogal Brasil, valuing the Brazilian assets at $12.5 billion.

For China, the deal with Portugal's biggest oil company surpasses Chinese sovereign wealth fund China Investment Corp's last month acquisition of a 30-per cent stake in GDF Suez SA's oil and gas production and exploration subsidiary, for $3.1 billion. (See: CIC in talks to invest €2.3-bn in GDF Suez's E&P business)

The state-owned company will also make a shareholder loan of $390 million to Petrogal Brasil, which will be used to reimburse $1.3 billion or 30 per cent of the loans to Galp.

"Taking into consideration this investment and projected future capital expenditure, the total cash payout amounts to approximately $5.18 billion at closing," the Beijing-based company said in a statement.

Galp has stakes in four offshore blocks in Brazil's Santos Basin, including Lula or Tupi oil fields, which was largest crude discovery in the Americas in more than 30 years. Tupi is estimated to hold 6.5 billion barrels of recoverable oil and equivalents.