PetroChina, China's largest oil and gas producer, said it agreed to buy Brazil-based energy firm Petrobras' oil and gas assets in Peru, as part of a drive to meet China's rising energy needs.
PetroChina will pay $2.6bn (£1.6bn, €1.9bn) for all the shares of Petrobras Energia Peru, the company said in a statement. Petrobras Energia Peru has three oil and gas fields in Peru, producing about 800,000 tonnes of oil equivalent per year.
"The three target blocks are of relative good quality, with expected profitability potentials," PetroChina said in the statement.
"The success of the project will help to expand the scale of cooperation of the group in Latin America oil and gas field and promote the sustainable development in the overseas business of the group," it said.
PetroChina is looking to invest $60bn on overseas acquisitions over the period to 2020. By that time, the company intends to raise its production abroad to more than 50% of its total.
The acquisition requires regulatory approval from China and Peru.
PetroChina's government-owned parent, China National Petroleum, already owns and operates oil and gas assets in Peru as well as in Venezuela.
Brazilian-government controlled Petrobras agreed to sell its Colombian oil blocks and pipelines to Perenco UK Ltd. for $380m in October.
China's Increasing Overseas Oil Interests
China is currently the world's fastest-growing major economy with annual gross domestic product growth rates averaging 10% for the last 30 years.
In addition to being the most populous country, the unprecedented economic growth has increased its energy needs. Furthermore, increasing income levels have made China the world's biggest auto market by number of vehicles sold.
China's liquid fuels use is expected to grow by 13% between 2011 and 2014 to more than 11 million barrels per day, according to the US Energy Information Administration (EIA). Meanwhile, oil production in China is expected to increase by 6% over the period.
China has been promoting overseas acquisitions of oil and gas assets by its domestic companies, helping to ensure these companies have the necessary financing.
China's crude oil imports are expected to climb 7.3% and account for 58% of the country's total consumption, according to China National Petroleum Corp (CNPC).
Chinese companies have completed 83 overseas oil and gas purchases worth $100.7bn in the past five years, according to data compiled by Bloomberg. Cnooc's $15.1bn acquisition of Canada-based Nexen early in 2013 was China's largest overseas acquisition.
Over the last five years, Sinopec and CNOOC, the country's second and third-biggest oil and gas producers, spent $41bn and $26bn, respectively, on overseas assets.
China National Petroleum Corp has invested more than $9bn to purchase overseas assets in 2013, including the $4.2bn purchase of a stake in Mozambique's Rovuma fields in July. The company is planning to double its overseas output by 2015.