ANP plans to auction blocks beyond the 200 nautical miles recognized by the UN

March 28, 2019

Based on geological studies that show great potential for oil reserves, the government is considering offering, for the first time, exploratory blocks beyond the limits of 200 nautical miles (about 370 kilometers) established by the United Nations as its continental shelf.

Since 2004, Brazil has tried to expand these limits in the UN, and although the lawsuit has not yet been fully met, the exploration and production of oil in the region in front of the Santos Basin has already been authorized.

The group that accompanies the matter at the UN says it is desirable that the area be occupied.

The discussion is in the hands of CNPE (National Council of Energy Policy): the ANP said it has already suggested to the agency the inclusion of blocks located outside the exclusive economic zone in an oil auction to be held in 2020.

“In the evaluation of the agency, the region of the Santos Basin that is located beyond the limit of 200 nautical miles has potential for discoveries of petroleum deposits in the pre-salt layer,” says the ANP.

“We are facing the possibility of extra great wealth, not foreseen until two years ago,” says geologist Pedro Zalán, who has made a career at Petrobras and now runs the consulting firm Zag.

He analyzed data collected by Norway’s Spectrum Geo in an area that stretches between the Santa Catarina coast and the Lake region north of Rio and claims to have identified outside the 200-mile subterranean structures similar to those contained in large pre-salt reservoirs .

He estimates that, by analogy, the structures could hold between 20 and 30 billion barrels of oil and gas in prospective resources (a term that defines resources not yet found).

In the pre-salt already known, he says, prospective resources are estimated at 40 billion barrels.

The expectation, however, still embodies great risk, since it is made based on seismic research – a kind of ultrasound of the subsoil. Seismic is the first step in the oil exploration activity.

To confirm the existence of oil or natural gas, wells need to be drilled – sometimes thousands of miles long.

If so, there is still a work to delimit the reservoirs, which assesses if the volumes are commercially viable.

Oil exploration in the country has been moving toward 200 nautical miles a few years ago.

In the 16th round of ANP bids, scheduled for October, there are already blocks attached to the imaginary line that defines the boundary of the Brazilian exclusive economic zone.

The limit was determined by the UN Convention on the Law of the Sea and entered into force in 1994.

Until 2004, signatory countries were able to submit proposals for extending the boundaries of the continental shelf, based on geological information.

Initially, Brazil gained the right to economically explore a maritime territory of 3.6 million square kilometers, in which it has exclusivity over economic activities, artificial islands and protection of marine life, for example.

In negotiations with the UN, the country tries to expand the area to 4.5 million square meters. Today, the parts differ over 190 thousand square kilometers, distributed between the coasts of the North and Northeast regions.

The economic potential goes beyond oil – there are prospects for the exploration of minerals such as cobalt and manganese – which leads the Navy to call the area “Blue Amazon”.

According to the International Convention on the Rights of the Sea, the exploitation of wealth must generate payments to the International Seabed Authority of up to 7% of the value of production if the country is not an importer of the resource.

The Navy says that the South Bank dispute, which includes the Santos Basin region, has already been “fully analyzed” by the UN and recommendations on the case should be sent later this year.

Still, the assessment is that there is legal basis for the activity, says USP professor Wagner Menezes, who chairs the Brazilian Academy of International Law.

“If there was no extension [of the exclusive economic zone], that space would be international and we could not take advantage of that wealth.”

Industry experts warn that oil activity beyond 200 miles faces technological and logistics challenges.

The water depth (distance between the surface and the seabed), for example, can exceed 3,000 meters – in Lula’s field, the country’s largest producer, for example, are about 2.2 thousand meters.

In addition, the long distance from the coast makes it difficult to transport equipment, supplies and workers to the platforms, since it exceeds the limit of autonomy of the current helicopters and would require supply bases in the middle of the way.

The Ministry of Mines and Energy, which coordinates the CNPE, did not comment on the case, claiming that it is the ANP that studies the country’s oil potential. The ANP did not say how many blocks it would like to bid in the area.

Source: Folha de São Paulo

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