TOTALENERGIES IS STILL ATTRACTED BY BRAZILIAN OIL AND GAS MARKET

(Valor) TotalEnergies (formerly Total) promises to intensify investments in renewables, but, at the same time, it is looking closely at the Brazilian oil and gas market. The French oil company, which changed its name to symbolize its migration towards the energy transition, sees Brazil as a strategic player in the search for projects with increasingly lower costs and emissions, and plans to invest around US$ 500 million annually in the coming years, in oil exploration and production activities in the country.

The company’s forecast is to practically triple oil production, to around 150,000 barrels a day by 2025, driven by the development of the Mero project (ex-Libra), where the multinational is a partner of Petrobras, with a 20% stake in the field.

The company’s growth, however, may be even greater, depending on the success of the oil company in the auction of transfer of rights  surpluses of the Sépia and Atapu fields, in the Santos Basin pre-salt. The round is scheduled for December 17th.

The global president of exploration and production at TotalEnergies, Nicolas Terraz, told Valor that the company was left out of the 17th Round of concessions for exploratory blocks, on October 8, because the technical assessment of the potential of the areas offered was not conclusive: “It doesn’t mean that we don’t look at Brazil. We are very interested in the auction of the transfer of rights surpluses,” said the executive, in an exclusive interview on his first visit to Brazil since taking over the global leadership of the company’s exploration and production assets, in September.

Last month TotalEnergies launched an energy transition plan in which it seeks to become less and less an oil company and more an energy company, active not only in oil and gas, but also in renewables. The multinational’s forecast is that, in 2030, oil will represent 30% of the company’s sales mix. Natural gas will be the company’s big business, accounting for 50% of sales, while renewable energy generation (with a focus on wind and solar) will represent 15% and biomass and hydrogen another 5%.

For this, TotalEnergies forecasts global investments of US$ 13 billion to US$ 15 billion per year until 2025, 25% of which in renewables. Half of the company’s global budget will be devoted to growth, with a focus on gas and renewables. The other half will be focused on maintaining the base of activities, especially oil production. The French forecast is that oil demand will peak by the end of this decade.

“We are going to continue producing oil and gas to meet demand… Just to keep our production stable, we have to invest a lot in new fields and new capacity because of the natural decline in production,” said Terraz.

Given the approaching peak demand for oil, TotalEnergies believes the oil and gas industry will have to accelerate the development of reserves. The executive claims that the company’s strategy is to invest in projects with operating costs and emission levels that are increasingly lower and that Brazil fits “perfectly” within this strategy: “We will carry out our portfolio management based on these criteria.”

TotalEnergies is reviewing the company’s asset portfolio in Brazil. This year, it signed a contract with PetroRio to sell the 28.6% stake in the BM-C-30 concession (which concentrates the Wahoo discovery), in the Campos Basin. Last year, the company had signed an agreement with Petrobras to sell its 40% stake in the five exploratory blocks it operated in the Foz do Amazonas Basin. The asset was sold after the French oil company failed to obtain environmental licensing for drilling in the region. The company also intends to renounce the exploratory concessions it holds in the Ceará Basin.

The idea, according to Terraz, is to concentrate exploration and production activities outside the new frontiers, in the most consolidated basins in Brazil, such as Santos and Campos. In this sense, the oil company plans to start, in November, the exploration campaign in the CM-541, in the Campos Basin, acquired by the company in the 16th Round, in 2019. The block was the most expensive asset in history, in the concession rounds of the National Petroleum Agency (ANP). The area cost R$4.03 billion, in signing bonuses, to the consortium formed by Total (40%), Petronas (20%) and Qatar Petroleum (40%). Of this total, the French paid R$1.6 billion.

TotalEnergies is currently the only oil company (apart from Petrobras) to operate a field in the pre-salt production phase. Lapa, in the Santos Basin, in which the French company holds 45%, produces 55,000 barrels of oil a day, according to the National Petroleum Agency (ANP). The multinational sees potential to expand local production, with the development of the southwest area of ​​the field, which may produce an additional 20,000 barrels/day as of 2025.

The company’s expectation is that its production in Brazil will be strengthened in the coming years with the entry into operation of the four Mero platforms, scheduled for up to 2025. The field is operated by Petrobras. The French is also a partner of the Brazilian state company in Iara (Sururu, Berbigão and Oeste de Atapu), with 22.5%.

With the construction of Rota 3, an outflow pipeline scheduled for 2022, TotalEnergies wants to start selling the gas portion in Iara, in the wake of the process of opening up the Brazilian market. Outside the exploration and production sector, the multinational also operates, in Brazil, in fuel distribution and, through Total Eren, in renewable energies. “Brazil is a place where we can work to develop all the components of our strategy, from exploration and production to renewables,” said Terraz.

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