China's state-owned CNPC signed a preliminary agreement with Brazil's state-controlled Petrobras to acquire 20pc stakes in the 150,000 b/d Comperj refinery project and a cluster of offshore oil fields.

Under a strategic alliance agreement signed today, Petrobras and CNPC subsidiary CNODC agreed to study the feasibility of completing the stalled Comperj project with the support of external consultants. Petrobras would retain an 80pc interest in the refining complex.

The project, located in Rio de Janeiro state, is currently around 80pc complete. Construction stalled in 2015 after an industry-wide corruption probe uncovered a kickback scheme. The only ongoing work at Comperj is construction of a 21mn m³/d gas treatment unit (UPGN) under a R1.95bn ($586mn) contract held by independent Chinese firm Shandong Kerui and Brazilian engineering firm Metodo Potencial.

Upstream, CNPC would acquire 20pc of the Marlim, Voador, Marlim Sul and Marlim Leste fields in the Campos basin from Petrobras. The mature cluster accounts for around 350,000 b/d of heavy sour crude which would be used as feedstock at Comperj.

Petrobras recently announced pre-salt discoveries in the Marlim field and plans a revitalization of the deposit in 2021. The company has already received 25-year contract extensions from oil regulator ANP for most of the fields in the cluster.

"With the signing of the integrated agreement, we significantly advanced our strategic partnership with CNPC to complete the Comperj refinery and implement a consistent project to revitalize the Marlim field," Petrobras chief executive Ivan Monteiro said.

A final agreement between the two firms is expected to be completed by year-end.

The acquisitions by CNPC would significantly advance Petrobras $21bn divestment plan for 2017-18. Earlier this year, Petrobras sold a 25pc stake in the 190,000 b/d Roncador field in Campos to Norway's Equinor for around $2.5bn.

Petrobras continues to look for partners to help complete the second 115,000 b/d phase of the Abreu e Lima refinery, and state governments are in talks with Chinese firms Sinopec and Guangdong Zhenrong (GZE) for greenfield refinery projects in northeastern Brazil. Petrobras' plans to sell controlling stakes in four domestic refineries are still hung up in the courts.

CNPC, through subsidiary PetroChina, recently entered Brazil's downstream segment with the acquisition of a 30pc stake in TT Work, a Recife-based holding company with tanking, import and distribution subsidiaries in Brazil's northeast, for an undisclosed sum.

Today's announcement comes in the middle of a bitter election cycle where presidential frontrunner Jair Bolsonaro, the controversial far-right candidate now leading leftist competitor Fernando Haddad by a widening margin, has criticized the level of Chinese investment in Brazil, but has also defended Petrobras' need to divest downstream assets.

Source: Argus Media