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Brazil to Emerge as One of the Top Oil Exporters Globally by 2020
Brazil to Emerge as One of the Top Oil Exporters Globally by 2020
The rapid increase in subsalt production in Brazil will allow the country to emerge as a major oil exporter by 2020
Hyderabad,
AP,
India
(prbd.net)
13/04/2010
"Brazil to Emerge as One of the Top Oil Exporters Globally by 2020"
The rapid increase in subsalt production in Brazil will allow the country to emerge as a major oil exporter by 2020. Brazil’s oil production is expected to reach close to 5.2 million barrels per day (bpd) by 2020, making the country one of the top five oil exporters globally. A large part of this production growth is expected to come from the subsalt basins as the total subsalt oil production in Brazil is expected to reach 1.8 million bpd in 2020.
Huge oil and gas finds in the subsalt areas have prompted the Brazilian government to develop a new petroleum regime for the region. The new regime will abandon the concession system and shift to production sharing contracts. Through the new legislation, Petrobras will be granted full ownership of new subsalt acreage and will be guaranteed a minimum of 30% share of any subsalt area that the government decides to tender in licensing rounds.
These legislative changes will diminish the attractiveness of Brazil's upstream sector to international oil companies. The companies already operating in the subsalt areas will continue to operate under the existing terms but the changes in the law will significantly reduce the chances of companies without subsalt acreage having interests in these resources. This is especially true for areas that the government thinks have a high chance of exploration success or of large discoveries.
Even if new companies do secure access to subsalt exploration ventures, they will be unable to control projects because Petrobras will act as the operator of these projects. Further, under the new competitive production-sharing system, the financial rewards will also be lower.
The technological challenges in the development of the subsalt reserves and the concerns about getting the produced oil and gas from deep offshore to onshore areas have made development of these reserves capital intensive. It is estimated that the development of the oil these fields could entail investment of up to $400 billion.
As Petrobras is the leader in the development of the subsalt area in Brazil, a major part of the investment in the region is expected to come from the company. Petrobras intends to spend approximately $111.4 billion in subsalt development. It is estimated that Petrobras’ overall spending may increase to approximately $200-$220 billion during 2010-2014.
Petrobras is also looking at different financing options to fund its ambitious investment program. The $10 billion loan for oil agreement with China in May 2009 was a major step in this direction.
In addition, major international oil companies operating in the subsalt areas are also expected to invest a considerable amount in the development of the reserves during 2010-2020. Over the next ten years, BG and Repsol are expected to together spend approximately $35 billion in the development of the Brazilian subsalt reserves.
Petrobras is expected to emerge as one of the largest oil producing companies globally with total oil production reaching 4.3 million bpd by 2020. The company’s production from Brazil is expected to reach 3.9 million bpd by 2020 with approximately 1.2 million bpd coming from subsalt basins. The company aims to become one of the five largest publicly traded oil producers by 2020.
GlobalData’s report, “Brazil's Subsalt Discoveries - Offshore Brazil Emerges as a Leading Investment Destination for Global Oil and Gas Companies” provides key data, information and analysis on Brazil’s subsalt discoveries. Brazil has quickly emerged as the one of the important regions for offshore crude oil production in the world. With new fields, mostly offshore, and huge reserves being discovered in recent years, Brazil is fast emerging as the top crude oil producer. Subsalt reserves which are typically petroleum reserves thousands of meters below layers of sand and rocks and salt contain huge reserves of oil. Recent sub-salt discoveries have transformed Brazil into a country with one of the highest potential investment acreages globally. Tupi Field, which was discovered in November 2007, is the largest discovery in North and South & Central Americas since 1970. It has estimated recoverable reserves of 5-8 billion barrels. This discovery in the pre-salt layer, which extends from the State of Espírito Santo to the State of Santa, is considered as one of the most attractive exploration acreages worldwide. It will increase Brazil’s recoverable reserves of crude oil by 50%, which will significantly increase the revenues of the country’s oil and gas industry.
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