Equinor's auction prospects are boosted by BP's large Brazil oil and gas discovery
The announcement by BP on Monday that it had made its largest oil and gas find in 25 years off the coast of Brazil in Santos Basin bodes well both for Equinor and for their nearby interests. It also shows a strong appetite to auction oil blocks in October in this region.
Brazil became one of the largest oil producers in the world after discoveries were made nearly 20 years ago. The region is characterized by vast deepwater reservoirs under a layer of salt beneath the ocean's surface. If BP's Bumerangue Block proves to be viable, it would be a significant discovery in a part of the basin that is far from three large fields operated by Petrobras which produce the majority of Brazil's gas and oil: Tupi Buzios and Mero.
According to the national oil and natural gas regulator ANP, these three fields are responsible for just under 70% of Brazil's pre-salt output. This is almost 80% of its total production. Roberto Ardenghy of IBP, the oil lobby group, says that the BP discovery and recent Petrobras discoveries in other areas of the Santos-Campos basins show the potential of Brazil's "fringes".
ANP has received 15 firm registrations for the October auction of blocks in Santos & Campos basins.
Petrobras geologist Pedro Zalan said that the pre-salt was heating up. He spent 30 years working at Petrobras. He said that the state-run oil company holds some of the most promising areas in this region, but rivals have plenty of space. BP's find highlights the potential of Santos, even as Petrobras is putting its resources into an environmentally sensitive area off Brazil's north coast. The state firm says this region is the best place to replenish its reserves.
Flavio Menten is a Rystad Research analyst. He said: "This doesn't take the spotlight away from the Foz do Amazonas Basin, where unlocking this new play will significantly change the future oil and gas industry of Brazil."
Experts say that high levels of carbon dioxide in BP's Bumerangue discovery could have an impact on its economic viability.
Gordon Birrell, BP's director of production and operations told analysts in a call with investors on Tuesday that he wasn't "particularly" concerned about the CO2 levels within the block.
Wood Mackenzie, in a client report, said that if confirmed, this could be the "biggest deep-water discovery since Buzios 2010", referring to the Petrobras field, which is on track to become Brazil's biggest producer.
The discovery also brings to light two blocks that Equinor acquired near Bumerangue as well as a larger BP Block adjacent to Bumerangue which it plans to drill in the next year.
Zalan, a former Petrobras geologist, said that the blocks "have a very high probability of containing petroleum."
Rystad's Menten said that while Equinor's purchases are near Bumerangue they are outside Brazil's presalt polygon. Rystad has not yet committed to exploratory drill in the area.
Equinor didn't immediately respond to a comment request. (Reporting and editing by Brad Haynes, Rod Nickel and Marta Nogueira)
(source: Reuters)
