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Malaysian oil and gas company Petronas has signed an agreement to acquire 50% exploration and production rights in two Brazilian fields from Petróleo Brasileiro (Petrobras).

The two resources under the deal are the Tartaruga Verde field and Module III of the Espadarte field, both located at the Campos Basin offshore Brazil.

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The Tartaruga Verde field produces nearly 103 thousand barrels per day (bpd) of oil and 1.2 million cubic metres of gas a day.

The Module III is to be developed in an integrated way with Tartaruga Verde field, and the first oil expected in 2021.

The acquisition, carried out through Petronas subsidiary Petronas Petróleo Brasil (PPBL), will bolster Malaysian firm’s upstream portfolio in South America.

“Continued portfolio management contributes to improving capital allocation, thereby increasing value creation for our shareholders, as well as making it possible to reduce the company’s indebtedness and cost of capital.”

The deal is valued at $1.29bn and Petronas will pay the consideration in two tranches. The first $258.7m installment has been already paid at the signing of the agreement while the remaining $1.03bn will be paid when the deal gets completed, subject to adjustments.

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The closing is subject to approval from the Brazilian Administrative Council for Economic Defense and the Brazilian National Agency of Petroleum, Natural Gas and Biofuels. Once completed, Petrobras will continue to operate the two fields with the remaining 50% stake.

For Petrobras, the transaction is aligned with its divestment strategy to reduce its debt. In a statement, the Brazilian company said that the total value of asset divestments this year amounts to $11.3bn. The $8.6bn divestment of its 90% of TAG pipeline unit to France’s Engie is also near completion.

Petrobras chief executive officer Roberto Castello Branco said: “Continued portfolio management contributes to improving capital allocation, thereby increasing value creation for our shareholders, as well as making it possible to reduce the company’s indebtedness and cost of capital.”