Woodside Petroleum may be shaping up as Karoon Gas's mystery partner for the acquisition of two oil fields from Brazilian national oil giant Petrobras, in what would be a revival of the Perth-based player's interest in the South American nation.

Speculation has been circling since late last week that Woodside is the front runner candidate to join with Karoon for the purchase of 100 per cent of the Bauna oil project and 50 per cent of the under-construction Tartaruga oil project.

Petrobras declared last week that it had reached the stage of exclusive talks on the sale with Karoon, which is known to be looking to partner up to reduce its funding costs.

The assets – including existing oil production as well as prospective production and exploration potential – appear to fit with Woodside's strategy for acquisitions but would represent a reversal of its exit from offshore Brazil earlier this decade.

Woodside's existing exploration portfolio in South America is limited to a 35 per cent interest in acreage in the Ucayli Basin in Peru, another country where Karoon is active.

Morgan Stanley analyst Adam Martin has told clients that while Woodside has not confirmed it is involved in the process he would not be surprised if a third party was involved.

Woodside was identified in specialist oil and gas industry newsletter Upstream as Karoon's partner.

"Brazil is not located in Woodside's core geographical focus areas but it has stated that it wants more oil in its portfolio and the assets are offshore and in shallow water both fitting Woodside's core capability," Martin said.

Any deal could also result in Karoon's partner – Woodside or not – also buying into the junior's own discoveries offshore Brazil at the Echidna and Kangaroo fields.

Meanwhile, Karoon's other deal announced also last Friday, its securing of an exploration permit in the Great Australian Bight has been overshadowed by Tuesday's news that the player the most advanced towards drilling in the region, oil major BP, has done a volte-face, and ditched the project.

While its partner Statoil still has the right to proceed the decision casts doubt over the future of any further drilling in the remote waters far off the South Australian coast which has been vehemently opposed by environmental groups.