Spain’s Repsol sells 40 percent stake in Brazil subsidiary to China’s Sinopec for $7.1B

Friday, October 1, 2010

Repsol sells stake in Brazil unit for $7.1B

MADRID — Spanish energy company Repsol said Friday it has sold a 40 percent stake in its Brazil subsidiary to China’s Sinopec for $7.1 billion, creating one of Latin America’s largest energy companies.

The company said Sinopec would inject the capital into the venture, called Repsol Brasil, bringing its total valued to $17.8 billion.

The deal would allow the Brazilian unit to fully develop all its current projects, which include some of the world’s largest exploratory discoveries in recent years, Repsol said.

“We are very pleased to share the development of Repsol’s Brazilian projects with an internationally renowned and experienced partner as is Sinopec. Together we can help expand business relations between our countries,” said Repsol Chairman Antonio Brufau.

He said the deal was a good reflection of the increasing value of Repsol’s exploration, particularly in Brazil’s pre-salt offshore, in the last few years.

Brazil’s offshore boasts one of the world’s fastest-growing oil and gas reserves, Repsol said.

The agreement, which is is subject to the approval of regulatory authorities, allows for both companies to continue expanding their activity in Brazil jointly or independently, the company added.

News of the deal sent Repsol’s shares up by 6.1 percent to euro20.05 ($27.36) on the Madrid bourse.

Repsol is one of the largest independent upstream operators in Brazil and the country’s third-largest oil producer in 2009. It is the largest foreign owner of exploratory blocks, with presence in the Santos, Campos and Espiritu Santo Basins, the company said.

Sinopec, Asia’s largest refiner by capacity, is the biggest petroleum and petrochemicals company in China, producing over 350 million barrels of oil equivalent annually, and with reserves close to 4 billion barrels of oil equivalent. The company has almost 50 projects in 20 countries.

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