Brazil’s O&G Market - mid 2013 Review

Brazil is the largest country in South America and its oil and natural gas markets have expanded massively in recent years, causing the resurrection of its shipbuilding industry as a bonus. The challenging deepwater development projects have high priority in investments both is subsea technology for deepwater field development and onshore and offshore logistics infrastructure.

In recent years Brazil has experienced rapid growth in the petroleum sector. O&G production went from 1.5 million barrels per day in 2001 to 2.4 million b/d in 2010. Offshore production accounted for almost 90% of this figure in 2010. Yet there have also been large onshore natural gas discoveries, which means that the onshore gas market development is still significant and has a strong potential, specifically along the Amazon Basin and a few other Onshore Basins in the north.

Production growth is expected to be reaching levels of nearly 5 million barrels + per day around 2020. This growth is forecast to mainly come from the pre-salt discoveries in the Santos basin, beyond 2020 is anyone’s guess. Petrobras as state controlled national operator, is the dominant player in Brazil’s O&G market, operating about 90% of the offshore production in the country. With new rules for pre-salt E&P stating that Petrobras will be the sole operator and will have at least a 30% share of all future pre-salt plays (Including the new Libra field).

Several international oil companies have made discoveries, and privately owned Brazilian oil companies are emerging as key players. Statoil has the 2nd largest operator production in Brazil from it’s Peregrino field. Projects like Golfinho, Marlim Leste, Albacora Leste, and Cachalote (all Petrobras) and Frade (Chevron) have also contributed to the growth in recent years, while the famous Lula field, which for a while was thought to be the biggest field that would be found, has been the first to produce oil from the pre-salt resources.

In 2011 the National Petroleum Agency (ANP) was only forecasting 17.9 billion barrels boe of recoverable oil in the pre-salt.Now with the confirmation of the recoverable volumes of 8 to 12 billion barrels boe from the giant Libra field in Brazil's Santos Basin, the pre-salt explored so far could yield 35 billion barrels boe of recoverable oil, more than double Brazil's existing reserves.

Analysts and geologists alike have said that the total amount of oil in the region could reach 100 billion barrels,yet  that is only considering the three basins where pre-salt reserves have been discovered, all located along Brazil’s southeast coast.

There is still true potential for deepwater pre-salt discoveries along Brazil’s northeast and north coasts, which align beautifully with regions in West Africa where deepwater pre-salt reservoirs have already been discovered, such as Ghana in the north and in Angola’s Kwanza Basin. Pre-salt exploration along the north and northeast coasts of Brazil and northwest coast of WA are only just beginning and no one really knows the true potential in terms of recoverable volumes in these areas. There is no doubt though that large exploration investments will need to be made on both sides of the Atlantic in order to uncork them.