Brazil on the rise in oil geopolitics

February 12, 2019

IOCs direct investments to the South Atlantic is consolidating itself as a supply hub

In its latest financial report, released on March 8, Spectrum Geo seismic service provider noted that international oil companies are increasingly directing resources to E & P activities in the South Atlantic, especially in Brazil.

“Our investments have been predominantly directed to less developed regions of the South Atlantic in recent years, which leaves us in a privileged position,” the company noted.

The result of the last auctions carried out by the ANP illustrates this scenario well: more than 15 companies from several countries have acquired about 50 exploration blocks in the last four rounds of the pre-salt and in the 14th and 15th concessions auctions.

In the group are majors such as ExxonMobil, Shell, Total, BP and Chevron, in addition to the Chinese CNODC and CNOOC, the Norwegian Equinor, the Spanish Repsol, the Portuguese Petrogal (Galp), the American Murphy, the Australian Karoon, the Qatari QPI and the German Wintershall.

“This will be a year of Brazilian deepwater,” Total CEO Patrick Pouyanne told analysts last week.

Lapa field operator and partner of Petrobras in Libra, the French oil company is expected to drill the largest number of deepwater wells in the world – 22 in total – according to the Westwood Group.

With 20 years of experience in the operation of the Peregrino field in the Campos Basin, Equinor plans to produce up to 500,000 bopd in 2030 in the country – about four times the current volume.

“The exploratory portfolio in Brazil is the best we have seen since the Norwegian Continental Shelf in the 1980s,” said Margareth Øvrum, executive vice president of Production Development in Brazil, during the presentation of the company’s results.

The largest E & P company in the world, the North American ExxonMobil was the highlight in the Brazilian auctions promoted since 2016, taking 21 blocks, with 11 being the operator. This is a larger number than that of Petrobras itself, which acquired, during the same period, 18 blocks

“Another important focus of our deepwater development is Brazil, where we quickly built a leadership position in terms of exploration, adding 2.3 million net acres in the last year,” said CEO Darren Woods.

Galp, Petrobras’ partner in Lula, the largest producer in the country, has Brazil as one of its main sources of oil today.

“The entry into operation of new platforms associated with major projects … Brazil has boosted Galp’s results to a level where international activities have secured more than 80% of operating results,” said the Portuguese company in the financial report on the fourth quarter of 2018, published on Monday (11/2).

 Great discoveries in the 21st century

The growing interest of oil companies is not surprising given the volume and quality of the reserves discovered in the pre-salt. But even before its official announcement in 2006, there were indications that the country would gain importance on the international stage.

In an article published in 1998, Anthony E. Mitchell of the American Enterprise Institute for Public Policy Research and Paul Michael Wihbey of the Institute for Advanced Strategic & Political Studies had already drawn attention to the country’s potential.

For the authors, the South American offshore – where great discoveries would still be made in Venezuela and Guyana – and the West African coast would emerge as a new supply hub in the world, “being shortly recognized as assets of vital US interest “.

More than a decade later, Johns Hopkins University researcher Paul Isbell said during a visit to Brazil in 2014 that the center of gravity of the world supply would gradually shift to the “Atlantic Basin.”

“Brazil and the US should cooperate to seize opportunities in the region,” he said.

In an article published late last year, William Nozaki, technical director of the Institute for Strategic Studies in Oil, Gas and Biofuels (Ineep), pointed out that the main discoveries made in the 21st century are concentrated in the Americas, salt, US shale gas and tight oil, and oil from Canadian tar sands.

“America has become a central territory in the new oil geopolitics,” says the researcher. “But apparently she’s not alone in this new setup,” he says.

He points out that important discoveries have been made even in countries such as Russia, China, India and Turkmenistan, “which places Asia also on the radar of the new structural transformations of the oil geopolitics.”

Production outside OPEC

In any case, prognostications point to Brazil as one of the main drivers of oil and gas production growth outside OPEC in the coming years, as pointed out in an interview with S & P Global Platts director Mark Schwartz .

The Energy Information Administration (EIA) predicts the country will add 300,000 b / d to world production by 2019 and 200,000 b / d by 2020, second only to the US in those two years.

“Continued emphasis on the development of pre-salt resources and the implementation of reforms, such as changes in local content rules, could result in even higher production growth over the period considered,” the agency said.

OPEC has an even more optimistic estimate for Brazil. In a report published in January, the organization estimates that the country will add 360,000 b / d to the world supply this year.

“Production could grow substantially next year if the FPSOs that are behind schedule and other units scheduled for the year will be operational by 2019,” the statement said.

Source: Brazil Energy

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.