CNOOC firms up deal with Petrobras to increase its stake in Brazilian field

Chinese partner paying over $2 bln to Petrobras for more interest in Brazilian field

Chinese oil and gas company CNOOC has sealed a deal with the Brazilian giant Petrobras, which will allow it to acquire an additional interest in the Búzios field, located in the pre-salt Santos Basin offshore Brazil.

FPSO P-74 in the Búzios field in the Santos Basin; Credit: Andre Ribeiro/Petrobras

Back in September 2021, Petrobras informed that CNOOC had shown an interest in buying an additional stake in its operated Búzios field.

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CNOOC expressed the interest following the period of up to 30 days it had to express its interest in exercising the option to purchase an additional portion of 5 per cent in the Production Sharing Contract (PSC) for the Transfer of Rights Surplus.

This option was activated after Petrobras issued the certificate of compliance to the country’s regulator, ANP, on the heels of a cash payment of $2.9 billion, which was received in late August 2021 for the obligations of its partners CNODC Brasil Petróleo e Gás (CNODC) and CNOOC in the Búzios Coparticipation Agreement.

In an update last week, Petrobras reported that it had signed a contract with CNOOC to assign an additional 5 per cent interest to the Chinese giant, allowing it to successfully increase its stake in the Búzios field, as a result of the option to purchase an additional share, exercised by CNOOC on 29 September 2021.

Petrobras further explained that the amount it would receive in cash at the closing of the transaction would be $2.12 billion for CNOOC’s share. The amount was calculated with a base date of 1 September 2021 and with an exchange rate of R$5.07/US$. The Brazilian company elaborates that this amount refers to the compensation and reimbursement of the signature bonus of CNOOC’s additional participation.

Moreover, this value will still be subject to the usual adjustments of this type of contract between the base date and the closing date while the effectiveness of the transaction is subject to the approvals of the Administrative Council for Economic Defense (CADE), the National Agency of Petroleum, Natural Gas and Biofuels (ANP) and the Ministry of Mines and Energy (MME).

Once the transaction becomes effective, Petrobras will hold an 85 per cent stake in the Production Sharing Contract of the Transfer of Rights Surplus for the Búzios field, while CNOOC will hold 10 per cent and CNODC will keep the remaining 5 per cent.

In addition, the stakes in the Búzios Shared Deposit, including the portions of the Transfer of Rights Agreement and of the BS-500 Concession Agreement – 100 per cent Petrobras – will be shared among the three partners with Petrobras keeping the largest share of 88.99 per cent and CNOOC and CNODC holding the remaining 7.34 per cent and 3.67 per cent, respectively.

Recently, Petrobras has been handing out contracts for activities on the Búzios field. In December 2021, Brazil’s oil and gas giant awarded a third rig contract to Seadrill for this field.

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This deal came less than a month after Petrobras inked two other contracts with Seadrill for work on the Búzios field. Thanks to these three contracts, Seadrill’s West Jupiter, West Carina, and West Tellus rigs will carry out operations on the field.