Brazil Exploration Review 2013

Libra Pre-salt

The auction of Libra pre-salt field, forecast to contain between 8 and 12 billion barrels boe in recoverable reserves, was Brazil's first bidding round in the pre-salt area, and failed to meet the high expectations placed on it by the Brazilian government, yet the government, the ANP (National Oil Regulator) and Petrobras are highly satisfied with the results because they managed to attract important and experienced partners in Shell and Total, along with the high rolling Chinese companies. Despite a nine-month global publicity campaign and predictions of fervent bidding by as many as 40 firms, the license was awarded to the only consortium to register a bid. Another controversial state controlled company PPSA will oversee the contract’s implementation, having both voting and veto rights. Brazil's national operator Petrobras clinched a 40% operating stake with Anglo-Dutch giant Shell 20%, France's Total 20% with the balance divided between China's CNPC and CNOOC.

Franco Pre-salt – New Monster Play in Brazil

The Franco pre-salt field, which is located southwest of the massive Libra field that was auctioned in October 21st, originally had been forecast to contain 3 billion barrels boe of recoverable light oil. In light of new studies, the Franco pre-salt field is now believed to contain recoverable oil volumes equal to or superior to the Libra pre-salt field, something hovering around 10 billion barrels boe. This is excellent news for Petrobras, which is in the process of making major exploratory, production and infrastructure investments and desperately needs new capital. The reason it is excellent news has nothing to do with oil auctions, but because Franco is part of an onerous concession scheme with which the Brazilian government plans to help finance Petrobras’ future investments without having to divest itself of capital. In order to do this, in 2010 the Brazilian government transferred the rights to 5 billion barrels boe believed to be present in 6 areas, to Petrobras, through the onerous concession scheme, in which the oil is produced by Petrobras and its profit returns to the national operator as investment capital. Of these 6 areas in the scheme Franco was the biggest, yet there are other significant areas also and it is yet unclear if volumes exceeding the 5 billion barrels boe will also be included in the onerous concession.

Round 11 – Northeast Coast and Equatorial Margin

The 11th O&G licensing round in May revamped waning interest in Brazil's O&G sector by offering investors new acreage for the first time since 2008. The result did not disappoint with a record set for upfront bonuses with companies committing R$2.8 billion (US$1.1 billion), surpassing the previous mark of R$2.1 billion. BG was among the biggest winners, clinching 10 of the 12 blocks in which it bid. Petrobras, BP, Total, BHP Billiton and Galp also won concession rights. This bidding round marks the beginning of intensive exploration along Brazil’s Equatorial Margin, which includes the Amazon River Basin, the Potiguar Basin, Pará-Maranhão Basin, Barreirinhas Basin and Ceará Basin. New seismic data indicates that all the basins in the area may be interlinked and a significant discovery of deepwater light oil has already been made off the coast of Pará by Petrobras, with other discoveries expected for this year.

Petrobras informed the discovery of a new light oil accumulation in ultra deep waters of Sergipe-Alagoas Basin, on the Northeast Coast, at concession area BM-SEAL-11, located in block SEAL-M-349. The well is 65 miles (105 kilometers) from the city of Aracaju, off the coast of the State of Sergipe, at a water depth of 7,638 feet (2,328 meters). This is Petrobras' fifth hydrocarbon discovery in ultra deep waters of Sergipe-Alagoas Basin this year, and another discovery was announced mid December. These last discoveries have led Petrobras to the conclusion that it has discovered a new oil province in the area with potential volumes exceeding 2 billion barrels boe.

Pelotas Basin

Brazil’s southernmost oil basin, the relatively unknown Pelotas basin, has seen little attention for over the past ten years, despite displaying clear direct hydrocarbon indicators in previous seismic surveys. However, a new 2D seismic program acquired in 2013 by Spectrum Geo Multi-Client is revealing new evidence for sand-rich systems and oil plays, making the deepwater Pelotas basin an excellent choice for blocks to be nominated in Brazil’s upcoming 13th bidding round, which may take place sometime in 2014. Spectrum believes that this new basin may contain substantial oil reserves and some geologists are speculating on volumes of billions of barrels boe.

Pre-salt Potential

The ANP sees the total pre-salt potential as huge. Just along Brazil’s coast, the ANP pre-salt findings predict reserves of 50 Bbo. However, some former Petrobras geologists, estimate reserves to be at least 125 Billion barrels boe, a major jump from the country’s current established reserves of 14 Billion barrels boe. It is safe to say that other huge reservoirs will be discovered in the near future, and there is a high probability that these will be located near the Libra and Franco plays in the Santos Basin. There is also potential for pre-salt finds along the Northeast and North Coasts, along with new discoveries in the Campos and Espirito Santo Basin, including areas between these two basins.