China is putting down roots in the backyard of Petrobras, newly-crowned share issue king of world stock markets, with the announcement of a $7.1bn oil alliance in Brazil between Sinopec and Repsol.
In the latest step in China’s global hunt for oil – and one of the more expensive – Sinopec, a state-owned oil and gas company, is to take a stake in the Spanish energy group’s Brazilian subsidiary in order to exploit its oil deposits in the country.
Sinopec will pay $7.1bn for 40 per cent of Repsol Brasil, with the remaining 60 per cent staying in the hands of Repsol, according to a statement from Madrid on Friday.
China is rich in coal-bed methane, a gas that can be used for fuel. But production has not proved easy. This year output of the gas will be less than a quarter of the official target.
Transport is a key obstacle. China’s pipeline network is dominated by oil giants CNPC and Sinopec, making it difficult for gas suppliers to get access. Now one company, Green Dragon Gas, has found a way to skirt the issue – by selling its coal-bed methane directly to customers.