Total expects to invest R$ 15 billion in E&P in Brazil by 2024

March 2, 2020

French oil company expects to reach average production of 150,000 barrels a day in the country in five years

Enthusiastic with the portfolio built in Brazil in recent years, the French oil company Total plans to invest between US $ 600 million and US $ 700 million per year in exploration and production (E&P) of oil and gas in the country over the next five years, the equivalent, at the current exchange rate, to R $ 15 billion by 2024. The company expects to increase oil production in Brazil by about four times, going from 40 thousand barrels per day, estimated for this year, to more than 150 thousand barrels per day at the end of the 2024.

“Today, we already have a large number of high quality assets,” said Total’s global E&P president, Arnaud Breuillac, to Valor. “We are satisfied with what we have now, but our ambition is to have more. I believe that the main driver is the quality of the assets ”, added the executive, who was in Brazil last week.

Globally, the French company produces about 3 million barrels of oil equivalent (BOE) daily of oil and gas, with annual revenues of around US $ 176 billion (almost R $ 800 billion). In Brazil, where it completes 45 years of activities this year, the company has already invested US $ 7 billion and has 3 thousand employees.

On Total’s portfolio are the expressive fields of Mero (ex-Libra) and Iara, in the Santos Basin pre-salt, and the promising CM-541 block, in the Campos Basin, acquired in the 16th Bidding Round of the Agency National Petroleum, Natural Gas and Biofuels (ANP), in October 2019. But Breuillac does not hide his enthusiasm for the Lapa field, also in the Santos Basin pre-salt.

“It [Lapa] is very symbolic because it is the first field operated by an IOC in production in the pre-salt,” he said. “Being an operator is important because we really believe that we can generate value, we can contribute even more in our partnership with Petrobras.”

Total owns 35% of Lapa, in partnership with Petrobras (10%), Shell (30%) and Repsol (25%). Breuillac says that the investments planned for E&P in the country may increase, if the company is successful in exploratory activities. Among the exploration projects, one of the company’s biggest bets is the CM-541, where the oil company plans to drill two wells, one at the end of the year and the other at the beginning of 2021. Total is the operator at the CM-541, with 40% stake, together with Qatar Petroleum (40%) and Petronas (20%), from Malaysia. “We are very hopeful,” he said.

Regarding the blocks in Foz do Amazonas, on the Equatorial Margin, where the oil company had its environmental license for drilling denied by Ibama, the executive said that the company is analyzing the project with the partners, to make a decision in the future. “We have to make sure that we make the best decision on this project.” Total has 40%, together with Petrobras (30%) and BP (30%) in five areas in Foz do Amazonas.

The current portfolio does not diminish Total’s interest in new auctions in Brazil. According to Breuillac, the company will continue to study opportunities. “We believe that Brazil will continue to have significant potential for new high quality resources.”

Asked about the changes under discussion in the government about the production sharing model, he said that the company is monitoring the process. “We will wait and see. If it is attractive, we will be interested ”.

Another area that attracts the attention of the French giant is the Brazilian natural gas market, which is undergoing a renovation. “We see gas, on a global scale, as a very important component in the energy mix, in the context of the energy transition,” he said. “We are looking for profitable business opportunities with the opening of the gas market in Brazil”.

Total also extended its operations in Brazil to the fuel distribution area, by acquiring in 2018 Zema Petróleo, owner of a network of around 300 service stations, mainly in Minas Gerais. “For Total, Brazil is strategic not only in E&P, but also because we see Brazil as a growing economy, with a large population, with a large market,” said the executive.

Regarding the energy transition process, Breuillac said that there is no “sense of urgency” to exploit petroleum resources, but a greater focus on resource quality and discipline regarding investments. “We don’t control the price of oil, but we control our cost base,” he said.

According to the executive, the average operating cost of the company in the production of oil and gas is US $ 5.4 per BOE – the lowest among international oil giants. And the goal is to reach $ 5 per BOE in 2021.

Source: Valor