Shell, Statoil strengthen foothold in Brazil with four blocks each

Floating Production Storage and Offloading unit (FPSO) Peregrino at Statoil’s Peregrino field in Brazil (Image source: Statoil)

European oil giants Statoil and Shell won four offshore blocks each in Brazil’s deep-water bid round held on Thursday. The round was historic in that it attracted the largest total signing bonus in Brazil’s history,  R$8 billion – or 2.4 billion in U.S. dollars. 

Shell’s Brazilian subsidiary, Shell Brasil Petroleo, won four deep-water exploration blocks in the Campos and Potiguar basins, bringing its total operated presence offshore Brazil to 18 blocks

The Anglo/Dutch major secured one exploration block on its own, and three in joint-bids with Chevron Brazil, Petrobras, and Petrogal Brasil. Of the newly acquired blocks, Shell will operate two.

Shell, which produces 10% of its global oil and gas output in Brazil, will pay its share of the total signing bonuses, equating for all bids to approximately $70-million (R$ 235-million).

“We continue to demonstrate our commitment to growing our production in Brazil and our strong belief in the value deep-water resources brings to our global portfolio,” said Andy Brown, Upstream Director, Shell. “This bid round offers significant potential for additional deep-water discoveries. These lease commitments fall within our agreed capital ceiling and are consistent with our value-based approach.”

Globally, Shell plans to invest $5-6 billion each year through 2020 into its deep-water business to strategically grow production and returns for the company. The business is on track to deliver annual, free cash flow of $6-7-billion by 2020 (at $60/barrel Brent RT 2016), the company said.

Statoil buying close to Peregrino

 

Norway’s Statoil and its partners were the high bidders for four blocks in the Campos basin.

A consortium comprising Petrobras (30%), ExxonMobil (40%) and Statoil (30%), presented the winning bid for the C-M-657 block in Campos Basin with a signature bonus of $638,5 million. The same consortium made up of Petrobras (40%), ExxonMobil (40%) and Statoil (20%), presented the winning bid for the C-M-709 block in the Campos Basin with a signature bonus of 450,000,000 USD. Both blocks will be operated by Petrobras.

Statoil, together with BP, presented the winning bid for blocks C-M-755 and C-M-793. The signature bonus for both blocks totaled $26 million (Statoil’s share was 40%). The blocks will be operated by BP.

Statoil’s new acreage next to existing fields

“The award in Brazil’s 15th bidding round reinforces Statoil’s ambition of long-term growth in Brazil and strengthens the company’s position in the prolific Campos basin, where it operates the producing Peregrino field. Other key projects located in Campos basin are the Petrobras operated Roncador field, where Statoil has a 25% interest, and BM-C-33, operated by Statoil and currently in the development phase.

Tim Dodson, executive vice president for Exploration in Statoil: “This award is in line with Statoil’s exploration strategy to build on core positions in prolific and proven basins. Access to new quality acreage is an essential prerequisite for further value creation through exploration activities and for increasing Statoil’s international production level from core areas such as Brazil,” said Dodson.

“These are world-class assets in a country where Statoil has been present since 2001, with an experienced local organization and deep understanding of local regulation”, says Statoil’s country manager in Brazil, Anders Opedal.

“I am happy to reinforce our partnership with solid and experienced companies such as Petrobras and ExxonMobil, which are also our partners in other concessions in Brazil, and to form a new partnership with BP”, adds Opedal.

The blocks are situated in the southern part of the Campos basin, close to Statoil’s operated position in BM-C-33 (Pão and Gavea), “having the potential to capture synergies of scale from existing discoveries and operations in Brazil.”

Europe was also represented by Wintershall which managed to get its hands on seven blocks, both individually and through partnerships. The German company secured staking in on block in the Santos basin, four in the Potiguar area, two in the Campos basin and one in Ceará. Spanish Repsol secured three blocks – two in the Campos Basin as operator and one in Santos, as partner to Chevron and Wintershall.

UK’s BP won two blocks in total, both as operator, and both in the Campos Basin.

One player from the Middle East

Qatar Petroleum CEO Saad Sherida Al-Kaabi

Qatar Petroleum was the only company from the Middle East getting acreage in the deepwater round. It won four blocks with non-operating stakes – two in Campos Basin with Exxon and Petrobras as partners, and two in Santos basin – with Exxon being the operator.

Worth noting, this is not the first time Qatar Petroleum has acquired acreage offshore Brazil. In October 2017, Qatar Petroleum was part of a winning consortium with Shell, and China National Offshore Oil Corporation for exploration in the Alto de Cabo Frio-Oeste block in the prolific Santos hydrocarbon basin offshore Brazil.

Commenting on the results of the round on Thursday Saad Sherida Al-Kaabi, the President & CEO of Qatar Petroleum, said: “We are pleased with the outcome of the bid round, which has enabled an expansion of our footprint in Brazil, in one of the most prospective basins in the world. This successful result is the second in six months, and constitutes an important achievement in executing our strategy of creating a large-scale, value-adding international portfolio while pursuing Latin America as an important core area for Qatar Petroleum.”

“I would like to take this opportunity to thank the Brazilian authorities for promoting a transparent and efficient process, and our consortia partners Petrobras and ExxonMobil for excellent collaboration on this opportunity. We look forward to working with our partners to create long-term, sustainable economic value for the project stakeholders,”  Al-Kaabi concluded.

In total, 13 companies, from 11 countries took part in bidding for the offshore acreage put up on offer. Of these, 12 acquired blocks, 2 being Brazilian and ten were from abroad. The signing of contracts for the 22 blocks awarded is expected to take place by November 30, 2018.

Offshore Energy Today Staff

 

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