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Sinopec Group Switches to Latin America

Sinopec Group, as China’s second-largest energy company is known, agreed Oct. 1 to pay $7.1 billion for a 40 percent stake in Madrid-based Repsol’s unit, which has reserves in the same area as the biggest oil discovery in the Americas this century.

Sinopec Group Switches to Latin America

That amounts to $15 a barrel compared with the $8.50 Petroleo Brasileiro SA paid last month for assets in Brazil, said Neil Beveridge, an analyst at Sanford C. Bernstein & Co.

“This shows the importance that China places on securing oil resources overseas,” Beveridge said by telephone from Hong Kong. “This is a key emerging deepwater basin, and there are a lot of developments taking place. Sinopec has a good position established, but the price it has paid is very high.”

Chinese companies spent a record $32 billion last year buying energy and resources assets abroad. Sinopec Group’s investment is the country’s second-largest overseas acquisition and follows the company’s purchase of Addax Petroleum Corp. for C$8.3 billion ($8 billion) last year to gain reserves in Iraq’s Kurdistan and West Africa. Cnooc Ltd. and state-controlled Sinochem Group have paid about $3.1 billion each for stakes in oil producers in Argentina and Brazil.


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