BP wins foothold in Brazil with deal
Posted: 12 March 2010 0618 hrs

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LONDON: British oil giant BP on Thursday unveiled a major strategic deal that will hand it further assets in Azerbaijan and the Gulf of Mexico and its first foothold in Brazil.

The London-listed firm will pay US firm Devon Energy US$7.0 billion (5.1 billion euros) in cash for the assets, the group said in an official statement, which announced the "broad-ranging deal."

"BP today announced a transaction that will deliver a material exploration position in ... deepwater offshore Brazil and significantly enhance its position in core strategic areas," the company said.

The Brazilian assets will mark the British group's first foray into the emerging market country.

BP chief executive Tony Hayward described the deal as a "strategic opportunity" that would offer long-term growth.

"This strategic opportunity fits well with BP's operating strengths and key interests around the world, offering us significant additional long-term growth potential with an emphasis on high-margin oil," Hayward said.

"As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets."

As part of the deal, BP will sell half of its Canadian oil sands project at Kirby in Alberta province to Devon Energy for US$500 million.

The pair will create a 50:50 joint venture, operated by Devon Energy, to develop the project.

"From a strategic and operational perspective, this deals makes a lot of sense to BP," said Westhouse Securities analyst David Hart in a research note to clients.

"Already the largest producer in the Gulf of Mexico, the additional interests there complement and strengthen this position."

"The deal in Brazil addresses what has so far been a glaring gap in its exploration portfolio - a position offshore Brazil."

Andy Inglis, BP's chief executive of Exploration and Production, said Brazil would become a "major" asset for the group.

"Through our entry into Brazil, BP will add a major position in another attractive deepwater basin," Inglis said in Thursday's statement.

"Together with the additional new access in the Gulf of Mexico, it further underlines our global position as the leading deepwater international oil company."

- AFP/yb