Cars are filled up at a Sinopec gas station in Beijing in this file photo.
Sinopec, China's biggest oil refiner by amount of oil refined, has signed a $5.2-billion (U.S.) deal that will give it a 30-per-cent stake in the Brazilian assets of Galp Energia, the Portuguese energy company.
The deal is the latest in a string of Chinese oil investments in Brazil, where rich oil resources lie offshore in deepwater areas that require a lot of capital to develop.
Galp Energia, which has a market cap of $11-billion, started a bidding process earlier this year looking for a partner to help finance its Brazilian projects, which include four offshore blocks in the pre-salt Santos Basin.
State-owned Sinopec on Friday said it would pay $3.5-billion for the 30-per-cent stake in Petrogal Brasil and Galp Brazil Services, which are both subsidiaries of Galp, in addition to $1.6-billion in capital expenditure, bringing the cash transaction to a total of $5.2-billion.
"The acquisition has further expanded Sinopec's overseas oil and gas business operations, which will make major contributions to the company's oil and gas output growth in the 12th and 13th five-year plan periods," the Chinese group said in a statement.
Galp shares fell 11 per cent in Lisbon on Friday morning on the news, their biggest decline for three years.
Chinese companies have been major investors in Brazil's offshore oil fields, with recent deals including Sinopec's $7.1-billion purchase of a stake in the Brazilian assets of Repsol YPF last year. Sinochem, the Chinese chemicals company, bought a $3.1-billion stake in the Peregrino oil field from Statoil last year.
Sinopec and other oil groups were also in talks over BG's Brazilian assets in recent months, although those talks have since collapsed, a person with knowledge of the matter said.
In 2009, the Chinese government inked a $10-billion oil-for-loan deal with Brazil, under which Sinopec is guaranteed a certain amount of crude supplies over a decade.
Chinese state-owned oil companies have done more than $20-billion in deals this year, making China one of the world's top acquirers in the oil and gas sector, alongside the US and the U.K.
China is the world's biggest energy consumer and second-biggest consumer of crude oil. Beijing has long viewed the country's reliance on imported crude - which supplies about half of China's total oil consumption - as a strategic weakness.
Galp's Brazilian assets account for some 90 per cent of its total reserves, and include more than 20 exploration and production projects. Eni of Italy holds a 33 per cent stake in Galp which it tried to sell to Petrobras of Brazil earlier this year, but the deal fell through. The Portuguese government also has a stake in Galp.