April 15, 2010 / 3:11 PM / 9 years ago

UPDATE 2-China's Sinopec signs Brazil deal with Petrobras

* Deal includes development of Brazil oil resources

* China development bank also signed agreement (Recasts, adds quote, development bank comments, background)

By Emma Graham-Harrison

BRASILIA, April 15 (Reuters) - Brazil state oil company Petrobras on Thursday signed a cooperation deal with China’s development bank and state oil company Sinopec that includes development of Brazilian oil resources, officials from both institutions said on Thursday.

The deal was signed as part of bilateral talks between Chinese President Hu Jintao and his Brazilian counterpart Luiz Inacio Lula da Silva ahead of a summit meeting in Brasilia of leaders from Brazil, Russia, India and China — known as the BRICs.

“(The deal) will cover developing Brazilian oil (deposits), trade and engineering equipment and materials,” Sinopec Chairman Su Shulin told Reuters, declining to provide further details.

He said Sinopec bought 2.28 million tonnes of Brazilian crude oil last year, adding that in 2010 “maybe it can grow a little.”

Brazil’s recent discovery of vast offshore oil reserves has opened a new area of potential cooperation with resource-hungry China, which last year agreed to lend $10 billion to Petrobras in return for guaranteed oil supply over the next decade.

China Development Bank Chairman Chen Yuan told Reuters the accord will not include a new $10 billion credit line, countering speculation Petrobras would tap Chinese capital as it faces a potential cash crunch.

Brazilian media this week reported that Sinopec will buy stakes in two offshore blocks from Petrobras (PETR4.SA)(PBR.N) as part of a cooperation agreement to be signed during the BRIC leaders’ summit. [ID:nN14140781]

A division of China’s Sinopec Group (0386.HK)(SNP.N) this week agreed to pay $4.65 billion for ConocoPhillips’s (COP.N) stake in a Canadian oil sands project, China’s second-largest investment in North America.

A Brazilian newspaper reported Petrobras was seeking a $10 billion loan in exchange for oil. The company is currently awaiting Congressional approval of a capitalization plan that would swap new shares for rights to billions of barrels of in unexplored offshore fields.

Petrobras has already borrowed aggressively to develop massive deep sea reserves in the subsalt province and has said it plans no further borrowing in the short term. (Writing by Brian Ellsworth; Editing by Marguerita Choy)

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