October 18, 2018
Anglo-Dutch Shell closely follows the election in Brazil, where it has disbursed nearly $ 5 billion in signature bonuses in pre-salt auctions over the last five years. However, whatever the outcome on Oct. 28, the company plans to invest $ 1bn-$ 2bn a year in deepwater exploration and production in the country by 2025.
“We are always looking at what is happening in Brazil,” said Wael Sawan, global vice president of Shell’s Deepwater division. “We keep a close eye on the elections, partly because of our business, but also because of the social and team perspective,” he said.
Despite the special attention to the electoral process in Brazil, considered one of the four main countries in the world for the group’s activities, Shell will maintain the investment plan in the country, independently of the next government. According to Sawan, Brazilian institutions give investors confidence in the long run.
“What I really like in Brazil, particularly in what happened in Lava-Jato, is the strength of judicial institutions.” For investors, this gives the confidence that the contracts will be fulfilled. The institutions, as well as the ANP and IBAMA, are very strong and try to do the best for the country, “said Sawan.
The executive stressed that the Anglo-Dutch group’s strategy for Brazil, where it has been operating for over 100 years, is long-term.
Asked about the risk of slowing down or even stopping new oil and natural gas exploration auctions, by decision of the new government, the executive explained that in this case, the big oil companies will focus on the assets bought in the recent rounds of the pre-salt.
“If there are more [auctions], we will participate,” Sawan said, adding that the company has an interest in participating in the eventual mega auction of the onerous assignment surplus, but that the decision will depend on the terms that will be proposed for the bid if it is confirmed.
The executive received Valor in a room inside the Olympus oil and natural gas production platform in the Gulf of Mexico. The seventh producing well is being connected to the vertically anchored floating unit. The offshore “mini-industry” currently draws about 80,000 barrels per day of oil and 2.4 million cubic meters per day of natural gas, at a depth of 945 meters. It has the capacity to produce 100 thousand barrels per day of oil and 5 million cubic meters of gas per day.
The Gulf of Mexico and Brazil are Shell’s main deepwater investment destinations. Regarding Brazil, which accounts for about 20% of Shell’s total oil reserves, the forecast to invest up to $ 14 billion over the next seven years may increase if further discoveries are made.
“If you look between today and 2025, in our plan, we already have almost $ 1 to $ 2 billion [deepwater investments per year]. If we have great discoveries, that number could grow,” said the executive. .
Asked about regulation for oil activity in Brazil, the executive mentioned the work of the current ANP board. “For companies like ours, it’s important that the rules are not changed. Because when you put billions of dollars and the rules change, you think not to invest there anymore,” he said, advocating regulatory stability.
Regarding the pace of environmental licensing for oil activities in the country, Sawan said that Shell prioritized investments in the Campos and Santos Basins, because they are areas with greater environmental knowledge.
He noted that the company also took environmental considerations into account in choosing the areas for which it competed in the 4th Pre-Salt Round in June of this year. In the end, Shell finished with the area of Três Marias, in the Santos Basin, in a consortium in which it has 40%, in partnership with Petrobras (30%) and Chevron (30%).