China is expanding its energy footprint in Latin America in a two-pronged strategy to secure its economy’s fuel needs and create a niche for future trade in the southern region.
China’s latest foray into equity investment is a 10 percent share of offshore Brazilian oil and gas reserves awaiting development as part of a multibillion-dollar program.
Brazil has been choosing equity partners with an eye on deeper collaboration that opens business opportunities for its own commodities and manufactures and China offers fits the bill perfectly — for now.
Despite analysts’ warnings that China’s economic slowdown may be quicker than originally estimated and, despite an outcry in the United States and elsewhere over Chinese investments, South America has given Chinese cash and enterprise an open-ended welcome.
The latest breakthrough for China came when Brazil’s National Petroleum Agency ANP gave the green light for China’s state-run conglomerate Sinochem purchasing a 10 percent stake in five offshore blocks.
Talks on the equity sale gained momentum last year and in January Sinochem purchased the stake from the local unit of French oil and natural-gas company Perenco.
ANP approved the deal at a board meeting this month. Details of the transaction are yet to become known but it follows several Chinese oil and gas acquisitions in Brazil, Argentina and ongoing talks on several other ventures.