RIO DE JANEIRO—U.S. major Chevron recently said the company will expand its presence in Brazil’s oil and gas industry, targeting presalt resources offshore.

“Chevron has been in Brazil for more than 100 years and remains committed to increasing its presence in the country,” the company said in a statement. “Brazilian presalt is a world class resource, and Chevron acquired six blocks of the presalt in 2018 in partnership with Petrobras and other large oil companies.”

Currently, Brazil’s presalt accounts for nearly 60% of the country’s total output of roughly 1.4 billion barrels of oil per day and 58 million cubic meters of natural gas per day. Besides Petrobras, Shell, Petrogal and Equinor are among the majors operating in presalt areas. But the potential to grow resources prompted companies such as Exxon Mobil Corp. and Chevron to step up participation in auctions for presalt acreage last year.

In September 2018, Chevron and 50/50 partner Royal Dutch Shell Brazil acquired the Saturno presalt block in the Santos Basin, shelling out a roughly $781 million signing bonus and offering 70.2% in profit oil. Shell will serve as operator.

According to Brazil’s oil and gas regulator ANP, the Saturno presalt area could hold an estimated 2.5 billion barrels of oil. In 2018, French geophysical data provider company CGG completed a 3-D multiclient seismic survey in the region.

Decio Oddone, general director for ANP, said Saturno could be as large as the Libra Field, which is also in the Santos Basin. “Saturn is very big,” Oddone said. “It is almost the size of the largest we have.”

According to the Mercado Marítimo website, Shell has plans to drill five wells in the Saturno area. The campaign may begin in January 2020 with a single firm well. The four remaining wells may be drilled between mid-2020 and late 2021. Shell, however, has not confirmed this information.

In addition, Chevron acquired in June 2018 the Três Marias Block in the Santos Basin with partners Petrobras (30%) and Royal Dutch Shell (40%). The consortium offered 49.95% in profit oil, five times more than the required amount and spent a signature bonus of $26.3 million. Petrobras will serve as the field’s operator.

The Trës Marias Block, which is near Saturno, could hold an estimated 1.9 billion barrels of oil equivalent.

The map shows blocks that were auctioned during Brazil's presalt auction. (Source: ANP)
The map shows blocks that were auctioned during Brazil's presalt auctions. (Source: ANP)

The presalt push by Chevron comes after the company announced in early February the sale of its interest in two post-salt oil fields—the Frade in the Campos Basin and the deepwater CE-M715 Block in the Ceara Basin—to Brazilian oil operator PetroRio.

“This sale supports Chevron’s ongoing efforts to manage and optimize its global portfolio,” the company said.

Chevron held a 51.74% stake of the Frade Field, one of Brazil’s main producing assets.

The sale came after oil spills in 2011 and 2012 that stopped production. Chevron did not produce oil from the field between April 2012 and July 2013. Frade production fell from about 70,000 barrels of oil recorded before the spills to about 19,000 barrels of oil equivalent per day today.

PetroRio, which will become operator of the field with a 70% interest, believes EOR technology can boost Frade output. The field is expected to have a useful life until 2035. Petrobras holds the remaining 30% interest.

PetroRio also acquired from Chevron a 50% operated interest in the Ceara Basin’s CE-M715 Block. The transaction now is under regulatory approval by ANP.

Securing Investment

Brazil’s E&P regulatory framework is positive, according to Alejandro Duran, the oil and gas committee chairman for the Brazilian-American Chamber of Commerce.

“The opening of the presalt for different operators, the flexibility of local content requirements and the extension of Repetro are some of the progress that has increased the security of investment in the country,” Duran said.

Duran, who is also Brazil country manager for Baker Hughes, a GE company, believes Chevron can contribute technologically and financially to improve presalt activities.

Alejandro Duran (Source: Brazilian-American Chamber of Commerce)
Alejandro Duran (Source: Brazilian-American Chamber of Commerce)

“Large IOCs [international oil companies], which have already played large projects outside Brazil, have developed experience that can be very useful in further improving presalt competitiveness,” Duran said. “I believe that companies such as Chevron can bring experience and highly relevant professionals.”

He emphasized that companies such as Chevron possess great technical reservoir knowledge.

But there is still work ahead for regulators and those developing Brazil’s presalt. These include the ability to monetize gas and environmental licensing processes, Duran said.

“Predictability is the key word that can significantly increase the ability to attract investors to this broad axis of economic growth that is the Brazilian presalt,” Duran added.