Page last updated at 09:30 GMT, Thursday, 11 March 2010

BP in $7bn deal to explore for oil in Brazil

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Oil giant BP has announced a deal that will allow it to begin exploring off the coast of Brazil.

It will pay US firm Devon Energy $7bn (£4.7bn) in cash for its Brazilian assets, as well as US deepwater sites in the Gulf of Mexico.

The deal includes 10 exploration "blocks" in Brazil, which has some of the world's largest deepwater oil fields.

BP is also selling Devon half its stake in some Canadian oil fields for $500m.

"Through our entry into Brazil, BP will add a major position in another attractive deepwater basin," said Andy Inglis, BP's head of exploration and production.

"It further underlines our global position as the leading deepwater international oil company."

Deepwater generally refers to oil fields in water 300 metres or deeper.

Oil companies around the world are exploring deeper and deeper areas around the world as technological developments make it possible to drill in areas previously considered too expensive.

The deal will give BP access to fields in Brazil's Campos and Camamu-Almada basins, in water depths from 100 metres to 2,780 metres.

The oil giant is also getting 240 leases in "ultra-deepwater" areas in the US Gulf of Mexico, and a small stake in a place in Azerbaijan.

As part of the deal, BP will sell Devon a 50% stake per cent stake in its Kirby oil sands in Alberta, Canada.

Huge potential

Discoveries over the past decade have suggested that Brazil could be one of the biggest oil producers in the world.

Other firms have been in Brazil for years. US giant ExxonMobil started exploring in 1999, for example.

Most of the Brazilian oil fields are deep underwater, making the cost of extraction high.

But oil producers are attracted by the size of the fields, suggesting the potential for large profits.

Exxon has said that 40 billion barrels of oil have been extracted from deepwater locations so far around the world, and that more than 100 billion barrels remain to be found.

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Telegraph Why BP is betting billions that God is Brazilian - 3 hrs ago
New York Times BP to Pay Devon $7 Billion for Fuel Assets - 9 hrs ago
The Independent BP buys into offshore Brazil with $7bn Devon Energy deal - 9 hrs ago
The Scotsman BP deals with Devon on Brazil and Canada - 11 hrs ago
Mail Online UK BP pays $7bn in deal to hunt for oil in Brazilian waters - 23 hrs ago

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