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Total to acquire sub-salt, gas interests from Petrobras

21 Dec 2016 23:13 GMT
Total to acquire sub-salt, gas interests from Petrobras

Santiago, 21 December (Argus) — Total will acquire a $2.2bn package of sub-salt oil and natural gas-related assets from Brazil's state-controlled Petrobras in a sweeping agreement signed today.

The Assets Package Agreement, which stems from a strategic alliance signed in October, gives the French company a broad upstream and downstream energy foothold in South America's largest country.

In Brazil's prolific Santos basin sub-salt patch, Total will acquire a 22.5pc stake in the Iara complex that is currently under development in the BM-S-11 block. Petrobras currently has a 65pc operating interest in BM-S-11, and will remain as operator with 42.5pc after the transaction closes. Shell has 25pc, and Portugal's Galp 10pc.

Total will also acquire a 35pc operating stake from Petrobras in the BM-S-9 block that encompasses the Lapa field that recently started production. Petrobras currently holds a 45pc operating stake in BM-S-9, which hosts other sub-salt fields such as Sapinhoa. Shell holds 30pc and Spanish-Chinese joint venture Repsol Sinopec the remaining 25pc. After the transaction closes, Petrobras will have a 10pc stake.

"The two companies will combine their internationally recognized expertise in deep-water to jointly develop solutions for long subsea tie-backs, reservoirs with high CO² content and digital geosciences data management," Total said.

In an unexpected dimension of the deal, Total will offer Petrobras an option to acquire a 20pc stake in Perdido Fold Belt exploration Block 2 that Total and ExxonMobil were awarded in Mexico's first deepwater licensing round early this month.

In the gas and power business, Total will acquire from Petrobras an unspecified amount of regasification capacity in the Brazilian company's 14mn m³/d Bahia LNG terminal, and a 50pc stake in two associated co-generation plants with total installed capacity of 322MW, and related pipeline transport capacity.

"These agreements will reinforce Total's position in Brazil through access to outstanding pre-salt resources while entering the promising gas value chain," Total chief executive Patrick Pouyanne said in a statement.

The global value of the acquisitions include cash, carry and contingent payments, Total said.

The deal is subject to the final execution of sale and purchase agreements, regulatory approvals and to partners' preemption rights on the Iara transaction, the company said.

The agreement with Total follows on the heels of a separate $2.5bn acquisition by Norway's Statoil of Petrobras' 66pc operating stake in the BM-S-8 block.