In a US$3.5 billion deal, Sinopec will acquire a 30% share in Galp Energia's Brazilian upstream assets. The transaction will give Sinopec a 3% working interest in the Lula (formerly Tupi) and Iara projects and the Iracema (Cernambi) discoveries in Brazil's pre-salt play. Sinopec will also acquire interests in three other Santos Basin deepwater blocks.
While the potential production from the assets is very large on a gross basis, the contribution to Sinopec's net boe output will be much more limited because of the small working interest the company acquires.
What is significant is that this transaction demonstrates (1) a continuing program within Sinopec of building its global new project asset base (the deal follows up on Sinopec's acquisition in late 2010 of a 40% share in Repsol's Brazilian assets) , (2) a focus on Brazil and deepwater as a future area of growth for the company, and (3) a signal that the Chinese NOCs will continue to move into direct competition with the GC and STIC peer groups for access to new growth assets outside China.