China’s Sinochem Looks to Sell Its 40% Stake in Brazilian Oilfield

Chinese energy and chemicals giant Sinochem Group is in discussions to sell its 40% stake in a producing oilfield offshore Brazil, Bloomberg reported on Friday, citing sources with knowledge of the talks.

Sinochem, which paid $3.07 billion for a 40% stake in the Peregrino oil and gas field in the Campos basin in 2011, is now in talks to sell the stake to independent producer Prio SA.

It is not certain that the talks will lead to an agreement, while the price of a potential deal is unclear, according to Bloomberg's sources.

Norway's Equinor is the operator of the field with a 60% stake, with Sinochem with its 40% as a partner.

The field, which is the largest field operated by Equinor outside Norway, started oil and gas production in 2011.

Equinor suspended production at the field between April 2020 and July 2022 to execute a major program of maintenance, upgrades, and repairs on the Floating Production Storage and Offloading (FPSO) vessel and installed a new platform, Peregrino C.

In October 2022, Equinor launched the Peregrino phase 2, with the new platform.

Peregrino phase 2 is expected to extend the Peregrino field life to 2040, the Norwegian energy major says. Phase 2 will add 250 million to 300 million barrels of oil, while at the same time halving expected carbon dioxide (CO2) emissions per barrel over the field remaining lifetime.

Oil production in Brazil has increased in recent years, thanks to new offshore projects.

Brazil's oil production has started to recover following a plunge earlier this year as many offshore platforms underwent planned repairs and maintenance work.

Despite the production decline in the first half of the year, Brazil is expected to be the third-largest contributor to non-OPEC+ supply growth in 2024 after the U.S. and Canada, and the second-biggest such contributor after the U.S. in 2025, according to OPEC.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• U.S. Crude Oil Inventories Continue to Fall
• European Natural Gas Prices Fall as Freeport LNG Resumes Operations
• Major Automakers Returning to Gasoline Cars as EV Demand Slows