Shell plans to expand presence in Brazil beyond oil

10/05/2019

Shell plans to invest about $ 2 billion a year in its activities in Brazil up to 2025 but may increase that amount to take advantage of new acquisition opportunities at all three oil and gas auctions. The company’s global president, Ben van Beurden, says the company’s offensive in the country will not only focus on the oil sector and that the Anglo-Dutch multinational’s expansion plan also goes through natural gas, biofuels and solar energy. The refining input, in turn, is discarded.

After investing R $ 2.17 billion in the acquisition of new oil and gas assets in the 2017 and 2018 rounds, Shell sees room to increase its presence in the country through the new auctions. According to him, Brazil is at the top of the company’s global strategy for deepwater growth.

“I’m ‘okay’ to have more exposure to Brazil. We’re definitely going to take a look at the three auctions [of 2019], “Ben van Beurden said in an exclusive interview with Valor.

The executive met with President Jair Bolsonaro, according to van Beurden, to express Shell’s “trust and commitment” to the country and listen to the government’s plans for the sector. Brazil is among the top three countries in the company’s portfolio. The company’s forecast is that its deepwater production could exceed 900 thousand barrels per day of oil equivalent (BOE / day) by 2020 and that Brazil could represent half of that volume.

Ben van Beurden said he sees the surplus auction of the Transfer of Rights assignment, scheduled to take place in October, as “attractive,” because it is assets with proven reserves and in production.

“But I’m not obsessed with reserves. In our strategy is value, not volume, that matters, “said the executive, when asked if he saw in the surplus auction a good opportunity to recover the loss of reserves of the multinational in 2018.

Shell currently produces about 375 thousand BOE / day in Brazil. The oil company operates the Parque das Conchas and Bijupirá-Salema (Campos Basin), and is a partner of Petrobras in the main pre-salt fields (Lula and Sapinhoá).

Although it is an integrated company, Shell, however, has no plans to enter refining in Brazil. Asked if the company is interested in the package of eight refineries put up for sale by Petrobras, Ben van Beurden explained that Shell has sold a good part of its refining assets in the world in recent years and that the company’s focus is, in refineries integrated to petrochemical complexes and hubs of global commercialization. “Brazil can become an integrated center in the future, but not for us at the moment,” he commented.

Shell, however, sees opportunities for integration into the natural gas chain. The executive stresses that the company is “ready” to invest in the Brazilian market, but that it is still awaiting the government’s definition of regulatory changes.

“We believe in gas as the fuel of the future and Brazil is a great market, but we need political definitions to unlock this market. There is a lot of gas available, especially in the pre-salt, which needs to find a home, “he said.

For the president of Shell, however, Brazil has the potential to become a relevant agent in the energy industry as a whole, not just in the oil and gas sector.

“Brazil is one of the most prominent players in biofuels in the world … In energy generation, we want to grow in the next decades in this sector and Brazil has fantastic opportunities in this, in solar energy, wind, but also in gas-fired thermal generation natural, “he said.

According to Ben van Beurden, Shell has set up an energy marketer in the country and also maintains a team dedicated to seeking investment opportunities in solar energy. “We are already looking at [opportunities in solar] at that moment,” he said.

Regarding the biofuels sector, the executive said he is in favor of increasing investments in the segment and that the company also looks at acquisition opportunities to expand its presence in the market. He recalls, however, that the strategy in the business is Raízen, a joint venture that the multinational has with Cosan.

Ben van Beurden explains that the search for new businesses in the field of renewable and energy generation in Brazil is part of the company’s global strategy to reposition itself against the energy transition to a low carbon economy. In February, the company announced its debut in Brazil’s energy sector by entering a 29.9% stake in the consortium responsible for the construction of the Marlim Azul gas-fired thermoelectric plant (565 megawatts) in Macaé, RJ, Brazil. with Pátria Investimentos and Mitsubishi. The unit will consume the pre-salt Shell gas.

Globally, the company works with an annual budget of about $ 2 billion in new energy. In 2017 Shell bought Sonnen, a German company that competes with Tesla and Samsung for the supply of solar-powered residential lithium-ion batteries, and New Motion, one of Europe’s largest electric vehicle charging companies, for example.

“I am confident that we can intensify investments in this business area, but we have to prove to investors that the theory is correct,” he said.

Asked how to reconcile the global trend of electrification of the fleet with the vocation of the Brazilian market for ethanol, Ben van Beurden said he believed that “different countries develop different business models.” “We do not necessarily have to have electric vehicles [in Brazil]. The issue is how to reduce emissions, “he said.

Source: Valor

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