Government launches program to revitalize onshore oil and gas production

August 22, 2019

Reate 2020, which will be launched today, the goal is to increase production from 270,000 to 500,000 barrels per day by 2030.

The shock of cheap energy promised by the Minister of Economy, Paulo Guedes, will include the revitalization of oil and gas production in land fields. Reate 2020 – Program for Revitalizing the Activities of Exploration and Production of Oil and Natural Gas in Land Areas will be launched on Thursday. The government’s goal is to almost double production from the current 270,000 barrels per day to 500,000 barrels by 2030. Of this total, 67% of production would be natural gas.

– Due to the lower costs of gas produced on land compared to pre-salt, we will experience a reduction of 30% to 40% of the prices currently charged in Brazil. With the growth of onshore production, we will have new companies. The return is faster than production at sea – said the Secretary of Oil and Gas of the Ministry of Mines and Energy, Márcio Félix.

The push could give breath to a shrinking sector: oil and gas production on land accounts for less than 10 percent of the total. In September last year, the onshore fields produced 274,000 barrels per day, according to data from the National Petroleum Agency (ANP). Today there are 235 thousand barrels.

To streamline the sector, the path will be to stimulate the creation of technology-based start-ups for onshore oil and gas exploration and production. In addition, the ANP selected 726 land areas in 14 states (Amazonas, Maranhão, Piaui, Ceará, Rio Grande do Norte, Alagoas, Sergipe, Espirito Santo, Santa Catarina, Minas Gerais, Goiás, Mato Grosso and Mato Grosso do Sul) and 712 onshore exploratory blocks to place in permanent offer.

The first auction of permanent offer areas is scheduled for September 10. 263 blocks will be offered. The return of areas that Petrobras is no longer interested in operating is another motivator.

Financing mechanisms are also being created to stimulate the entry of small and medium companies in the sector. One possibility is the use of oil and gas reserves as collateral to obtain financing.

– We have already started with the permanent public offering, which will take place in September. The idea is to simplify the rules further, ”said Felix.

In government calculations, it would be possible to leverage investments, which would go from $ 1.6 billion to $ 4 billion a year, with the prospect of generating 700,000 jobs, mainly in the Northeast. The expectation includes an increase in the number of companies operating in this segment, from the current 50 to 500.

Government projections are ambitious: natural gas production from these fields is expected to jump from 25 million cubic meters per day to 55 million – almost double the current 30 million cubic meters imported per day from Bolivia.

According to Anabal dos Santos Júnior, executive secretary of the Brazilian Association of Independent Oil Producers (ABPIP), there is demand today from private companies to invest in onshore production. He cites the progress of investments by companies in the North, Northeast and Southeast, which has been expanding production in mature fields:

– In recent years, we are checking the progress of investments of several companies such as Eneva, Rosnefet, Petrorecôncavo, among others. These companies are being responsible for the advancement of production in the interior, generating income and jobs.

PetroSynergy President Sergio Paez points out that the return of Petrobras’ sale of onshore fields is essential to increase production. Almost 20 years ago, the company bought the Campo de Tabuleiro de Martins, in Alagoas, which produced 100 barrels per day. Today there are 350 barrels. The oil company will participate in the ANP’s first permanent bid auction.

– We are optimistic about the possibility of revitalizing the activity on land. Brazil has a great potential to be explored, it needs to get out of this situation of almost abandonment. More private companies of different sizes will enter the sector, ”said Paez.

Source: O Globo

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