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PetroChina to Buy Petrobras Assets in Peru for $2.6 Billion (2)

November 13, 2013

Petrochina Co. Signage

PetroChina shares fell 2.4 percent to HK$8.50 at the close in Hong Kong today, taking its decline this year to 23 percent. Photographer: Jerome Favre/Bloomberg

PetroChina Co. (857), the country’s biggest oil and natural gas producer, will buy Petroleo Brasileiro SA (PBR:US)’s assets in Peru for $2.6 billion, expanding its portfolio in the region.

The Beijing-based company will take over three blocks of oil and gas fields in Peru from the seller, known as Petrobras, it said in a statement to the Hong Kong stock exchange. Petrobras owns two blocks entirely and has a 46 percent stake in the third, according to the statement.

Petrobras, the most indebted publicly traded oil company, has been selling assets to help finance projects in Brazil’s deep waters. China National Petroleum Corp., PetroChina’s state-owned parent, already owns oil and gas assets in Peru as well as in Venezuela.

“This will help PetroChina diversify its assets internationally,” Gordon Kwan, a Hong Kong-based analyst at Nomura Holdings Inc., said in a phone interview today. “This will help them learn operating lessons from their partners that they can apply elsewhere.”

PetroChina shares fell 2.4 percent to HK$8.50 at the close in Hong Kong today, taking their decline this year to 23 percent. The city’s benchmark Hang Seng Index dropped 1.9 percent.

The two companies won’t disclose the reserves in the blocks, PetroChina spokesman Mao Zefeng said in a phone interview. The Chinese explorer knows the assets well as it and CNPC have operated fields nearby, Mao said. The deal brings “good value,” he said, without elaborating.

Most Acquisitive

CNPC, the most acquisitive energy company in Asia, entered Peru in 1993 and operated at least three oil and gas parcels, according to its website. Peru is the first country where CNPC worked on an overseas project.

The assets called Lot 57, Lot 58 and Lot X are located in Peru’s Amazon jungle and PetroChina’s stake represents 12.1 billion barrels of oil equivalent, said Simon Powell, head of oil and gas research at CLSA Ltd.

“On paper this doesn’t look like it was an expensive deal for PetroChina,” he said. “But this is going to require significant investment in building infrastructure to get it out.”

Petrobras, controlled by Brazil’s government, agreed to sell oil blocks and pipelines in Colombia to Perenco UK Ltd. for $380 million in September to help finance projects in Brazil’s deep waters.

Exploration Assets

Petrobras, which entered Peru in 1996, produces about 16,000 barrels a day in the country and holds stakes in exploration assets in the Maranon, Huallaga and Madre de Dios basins, according to its website.

Lot 57, in which Petrobras owns 46 percent, is operated by Repsol SA. (REP) Repsol said last year that the block’s Kinteroni gas field holds at least 2 trillion cubic feet of natural gas. It announced July 25 that the field is ready to start production.

Lot 58 has 56.6 trillion cubic meters of contingent natural gas resources, according to Petrobras’s website.

Petrobras took a 40 percent stake in an offshore field called Libra, the largest discovery in Brazil’s history, in a government auction on Oct. 21.

Libra is the first auction of subsea prospects, known as pre-salt, using a production-sharing model. The group that won a 35-year concession for the Libra field also includes Royal Dutch Shell Plc (RDSA) and Total SA (FP), each gaining a 20 percent stake. CNPC and Beijing-based Cnooc Ltd. (883) have 10 percent apiece.

State-owned CNPC said in March it would spend $4.2 billion to buy a stake in Eni SpA (ENI)’s natural gas assets in Mozambique. The Beijing-based producer agreed in September to pay about $5 billion to purchase a stake in the Kashagan oil project from state-backed KazMunaiGaz National Co. in Kazakhstan.

To contact the reporters on this story: Aibing Guo in Hong Kong at; Benjamin Haas in Hong Kong at

To contact the editor responsible for this story: Jason Rogers at

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