And the queue are Chinese: Sinopec favorite to buy BG Brazil oil stake: source. If Sinopec Group wins, it would own part of all the "super-giant" offshore oilfields in an area known as "the Santos subsalt pole," the center of an area believed to contain 50 billion barrels of oil, enough to supply all of China's needs at current consumption levels for more than 15 years.
China's Sinopec is the favorite to buy part of BG Group's ( BG.L) stake in some of Brazil's most promising offshore oil areas, a source said, increasing its holdings in a fast-growing frontier believed to hold enough oil to supply China for 15 years. The winner could pay $20 billion or more for the BG stake, based on previous purchases in the area, analysts said.
Britain's BG will announce the sale of part of its Brazilian oil unit in the coming weeks, and Sinopec, China's second-largest oil company, is the leading candidate, a source with knowledge of the talks told Reuters.
BG declined to comment. A source close to BG said a Chinese buyer would probably secure the deal, although he declined to confirm Sinopec as the favorite.
A Beijing-based Chinese oil official close to Sinopec Group's overseas acquisition plans said he was unaware of the situation. Sinopec Group is the parent of Hong Kong and Shanghai-listed Sinopec Corp ( 600028.SS) ( 0386.HK) ( SNP.N), Asia's largest oil refiner.
Sinopec's ability to muscle out Brazil's state-led Petrobras ( PETR4.SA) , which has expressed interest in the fields, shows how the Rio de Janeiro-based company's $225 billion business plan, the world's largest corporate investment program, has crimped its ability to challenge rivals for a bigger share of the "filet mignon" of Brazil's offshore, the source said.
"They (BG) are demanding a high price for a share in subsalt," he said. "Petrobras's cash-flow is already under (too much) pressure from its business plan to be able to fight for this under these conditions."
If Sinopec Group wins, it would own part of all the "super-giant" offshore oilfields in an area known as "the Santos subsalt pole," the center of an area believed to contain 50 billion barrels of oil, enough to supply all of China's needs at current consumption levels for more than 15 years.
Petrobras is BG's main Brazilian partner in the Santos subsalt area and the operator and main shareholder of the fields owned by BG's Brazil unit.
Sinopec Group has already paid $12.3 billion to buy shares in the Santos subsalt area owned by Spain's Repsol ( REP.MC) and Portugal's Galp ( GALP.LS). The BG holding includes stakes in the super-giant fields known as Lula (formerly known as Tupi), Iara, Guara and Carioca.
The way BG is structuring the sale also reduces the influence of Petrobras. If BG were to try and sell its minority stakes in the actual concessions, Petrobras would have right of first refusal on any sale and the sale would require approval from Brazil's energy regulator, the ANP.
As BG is only selling shares in its local operating company, the legal entity that actually holds the concession rights, Petrobras has less leverage to slow or block a sale, Petrobras Chief Executive Jose Sergio Gabrielli told Reuters.
"In these circumstances we don't have the right of first refusal," Gabrielli said in an e-mailed response to questions through the company's press office.
Galp and Repsol, also Petrobras partners in the Santos subsalt, recently sold their stakes in their Brazilian operating companies to Sinopec, transactions that did not give Petrobras preference in any sale.
Gabrielli has said that Petrobras is interested in buying a share in BG's offshore oil holdings if BG puts them up for sale. Before the Repsol and Galp sales he said Petrobras was interested in buying their holdings too.
Gabrielli said he does not know what BG is doing with regard to a sale.
Companies besides Sinopec have also sought to buy a share in BG's Brazilian unit.
8 BILLION BARRELS
BG says that its has as much as 8 billion barrels of oil and natural gas equivalent reserves in the Santos subsalt pole. Assuming it plans to sell only a minority stake, the sale could net the company as much as $27 billion, an analyst said.
The estimate is based on the sale of 49 percent of BG's Brazilian unit and values its reserves at $7 a barrel, a price considered reasonable.
Reserves in fields under development and still requiring billions of dollars of additional investment usually sell for far less than the current price of oil.
"It is not surprising. With such a huge capital commitment and such a size of field, they (BG) would have to sell it down any way," said a resources industry banker with an international investment bank in Hong Kong, adding, however, that he was not aware of the situation.
Brent crude fell below $108 a barrel on Friday.
At 5 dollars a barrel, another level considered possible by the analyst, a 49 percent stake would net BG $20 billion.
At the level that Galp sold its stakes in the same region, BG would earn about $11 billion.
Because BG owns more offshore assets in Brazil's Santos subsalt than Repsol or Galp, its sale is expected to be larger than the $5.2 billion Sinopec Group paid for a share of Galp's unit and the $7.1 paid in the Repsol agreement.
EXTENDING GRASP
By buying 30 percent of the shares of Galp in Brazil in November the Chinese have guaranteed their presence in the Lula, Cernambi, Iara, Bem-Te-Vi, Caramba and Jupiter fields.
In 2010, Sinopec entered into a partnership with Repsol, earning an indirect stake in the Guara and Carioca fields.
The only Santos subsalt area where Sinopec doesn't have a field is Parati, where BG has a 25 percent stake.
The recent deals involving Sinopec Group in offshore assets show the Chinese company is keen to develop its offshore, especially, deepwater expertise. CNOOC Group, parent of Hong Kong-listed CNOOC Ltd ( 0883.HK) ( CEO.N), is China's largest offshore producer.
"It would be challenging for Sinopec to operate deep water. (But) they can learn from the operators and build up their expertise over time," said the Hong Kong-based resources banker.
(Additional reporting by Charlie Zhu in HONG KONG, Chen Aizhu in BEIJING, Tom Bergin in London; Writing by Jeb Blount; Editing by Alden Bentley and Muralikumar Anantharaman) |
