Petrobras, Brazil's national state-backed oil behemoth, has inked a deal with the Portuguese government to purchase a 50% stake in three offshore oil blocks in the country.

Under the terms of the deal, industry major Petrobras will operate the Gamba, Lavagante and Santola blocks, all of which can be found off the south-west coast of the European nation, in the Alentejo Basin. The three blocks cover a combined area of about 9,000 square kilometers and are situated in deep water.

The acquisition of the three 50% stakes is a game changing move by the South American firm. Following reports that it was scaling back on its overseas acquisitions, the Portuguese deals comes as something of a surprise to those in the industry. It seems Petrobras remains keen to maintain its hard-earned reputation as a market leader in deepwater exploration The pricing of the deal may well have significantly impacted upon the Brazilian firm's decision. When blocks are put on the market at a relatively cheap price, but remain highly prospective acreage, Petrobras appears to find it hard to resist. It seems the first has done in Portugal, as it did recently in Australia, acquiring stakes in offshore blocks in the Carnarvon Basin.

The move marks a deepening of Petrobras' exploration activity in Portugal. The company along with operating partners Galp Energia and Partex Oil & Gas, was awarded a total of four blocks, namely Camarão, Amêijos, Mixilhão and Ostra, in the Lusitanian Basin back in 2007.

The deepwater blocks, which collectively cover around 12,000 square kilometers, are located north off the coastline of Lisbon. The present contract provides for an exploration period of eight years. and will concentrate on deepwater exploration.

At the time of the signing of the agreement, the consortium of firms commented that it was planning to invest around $30 million in the first three years of involvement, during which time a seismic study would be carried out. Going forward, should exploration prove the presence of oil, investment could be upped, reaching a figure closer to $2.5 billion - according to Jose Sergio Gabrielli, Petrobras' CEO.

Tags: Petrobras