Why is China investing in Brazilian oil, when no one else is?

Earlier this month, the Brazilian government held what was supposed to be “the biggest oil auction on Earth,” selling off part of its massive deepwater pre-salt oil reserves. Instead, while the tender did bring in a record amount of money for auctions of this type (BRL 69.96 billion), it was regarded as a political flop, raising only two-thirds of the BRL 106.5 billion expected. Nearly every international competitor refused to make bids, with some not even attending the tender itself. The exceptions were only two firms: CNOOC and CNODC.

These two companies—relatively unknown to the Brazilian public—are Chinese state-owned firms with large outputs. According to consulting firm Wood Mackenzie, CNOOC produces 1.3 million barrels of oil equivalent every day, corresponding to close to one-third of the output of Brazil’s state-owned oil company Petrobras. The firm is focused on internationalization, exploiting deepwater oil and natural gas. 

In Brazil, CNOOC already has shares in three oil fields, ranging between 10 and 30 percent. It also owns 25 percent of a 5-billion-barrel oil field in Guyana, two reserves in Mexico, and exploits deepwater oil in American waters in the Gulf of Mexico.

But why did CNOOC and CNODC make...