LONDON - BP PLC announced this week that it has bought into a "diverse and broad deepwater exploration portfolio that includes assets off the shores of Brazil, Azerbaijan and the U.S. in a $7 billion deal with U.S. independent oil and gas producer Devon Energy Corp.," reports The Wall Street Journal.

"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," said BP CEO Tony Hayward. "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."

The deal will give BP a diverse and broad deepwater exploration acreage position offshore Brazil with interests in eight license blocks in the Campos and Camamu-Almada basins, as well as two onshore licenses in the Parnaiba basin.

In the Gulf of Mexico, BP will gain some 240 leases. The addition of Devon??s 30 percent interest in the major Paleogene discovery Kaskida will give BP a 100 percent interest in the project. The assets also include interests in four producing oil fields: Zia, Magnolia, Merganser and Nansen.

BP's entry into offshore Brazil will only add around 20,000 to 40,000 barrels a day to BP's output of more than 4 million barrels of oil equivalent a day, NCB Stockbrokers analyst Peter Hutton told The Wall Street Journal. "The move makes strategic sense...$7 billion is affordable and we estimate it takes BP just under half way into their 20 to 30% gearing range target," he said.

In a related subject, read more on how Brazil has the potential to become a major supplier of biofuels to the United States in the current issue of NACS Magazine??s Global Trends section.