October 02, 2019
Norwegian company, fourth largest oil company in Brazil, will invest US $ 15 billion in the country.
A foreign oil company that has made the most of Petrobras’ asset sales to strengthen its presence in Brazil, Norwegian Equinor (formerly Statoil) plans to start investing heavily in its new project portfolio in the country. The company expects to sign a package of goods and services contracts this year to get its most promising project off the ground: Carcará, in the Santos Basin, which promises to be the first pre-salt field developed by a multinational and which will have the largest platform in Brazil, with capacity for 220 thousand barrels / day of oil.
The company does not disclose how much it will disburse in Carcará, but the investments are part of the oil company’s U$ 15 billion business plan for Brazil by 2030. Another part of the funds will be directed to the installation of new platforms in this oil field and the discovery in the Pão de Açúcar area, as well as investments in the recovery of mature operating assets.
With global revenues of $ 78.5 billion in 2018, Equinor considers Brazil one of its three priority markets, alongside Norway and the United States. The company’s head in the country, the executive vice president of development and production, Margareth Øvrum, told Valor, however, that investments in the Brazilian market will not be limited to oil. The multinational wants to “take an active role” in opening the natural gas market and consolidate itself as a power generator.
“The opportunity [in Brazil] is unique not only in oil and gas, but in the area of renewables as well,” said Equinor, who plans to invest 15% to 20% of her annual global renewable energy investments by 2030
In 2018, the company entered the Brazilian solar energy market by acquiring the 162 megawatt Solar Apodi Complex in Ceará. Margareth sees room for Equinor to build a generator park that combines solar, offshore wind and natural gas in the future. “We have not decided, but we are open [to invest in gas thermal plants],” he said.
As the opening of the gas market takes its first steps, Equinor has decided that all gas produced in the first phase of Carcará production will be reinjected to increase oil recovery. Margareth points out that she is keeping an eye on developments in the sector’s reform and is seeking a market for her new projects, such as the second phase of Carcará and Pão de Açúcar, in the Campos Basin.
“[Developing the gas market] It’s a necessity for us … [Sugar Loaf] It’s completely dependent on market development,” he said.
Within the pillars of its business plan, Equinor wants to build value chain in the gas sector in Brazil. To this end, she said the company intends to do its part and is open to investing in infrastructure, such as marine pipelines and liquefied natural gas (LNG) terminals. She knows that the success of the company’s growth in the country requires the building of this market. “We are prepared to take an active role in Brazil’s gas value chain … We are open to making investments in infrastructure.”
However, according to Margareth, the company’s investments in infrastructure first depend on a signal that there will be demand for gas. “It is no use building infrastructure if there is no demand. That depends on GDP going forward, ”he said.
Equinor is the fourth largest oil and gas producer in the country, with volumes of 95,000 barrels of oil equivalent per day, according to the National Petroleum Agency (ANP). Margareth said the company’s goal is to develop its current portfolio of assets and even quintuple its production in the country by 2030.
Recently, Equinor investments have entered the eye of the hurricane of the diplomatic crisis between Brazil and European countries, on the policy of combating deforestation in the Amazon. The chairman of the Norwegian Parliament’s Energy and Environment committee, Ketil Kjenseth, suggested that the local government should ask the company to halt investments in an attempt to pressure the Brazilian government to stop the Amazonian fires. Margareth says, however, that Equinor “does not engage in political discussions” and that it maintains its strategy for Brazil firm.
According to Margareth, the goal is to develop a platform every two years in the country. Purchased from Petrobras in 2016, for US $ 2.5 billion, Carcará will start producing in 2024. Equinor owns 40% of the concession, along with ExxonMobil and Galp, and expects to close the platform ordering and subsea equipment and interconnections contracts in two months. A typical pre-salt project costs, according to market estimates, U$ 5.5 billion.
Current oil production in Brazil, however, comes from two other assets: Peregrino and Roncador, in the Campos Basin. Roncador’s 25 percent stake cost the company U$ 2.1 billion. With experience in the recovery of mature North Sea fields, the Norwegian has pledged another U$ 550 million to revitalize the field. Margareth said the goal is to increase the field’s recovery factor by ten percentage points to 39%.
In Peregrino, the company is installing new platform. Expected by 2020, the field’s second production phase will allow the company to increase its recoverable volumes by 250 million barrels. Equinor has produced 180 million barrels and expects to extend the field life by 20 years. The Norwegian also plans to invest, in exploration, drilling up to five wells in three years, and monitors the new bids. Concerning the interest in the Transfer of Rights Surplus auction, Margareth said there is no doubt that it is “big volume, but it needs value as well.” “We will go to the areas that create value for us,” she replied, without elaborating.
Source: Valor
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