Others Summary

Galp Energis Summary

Galp Energia participates in around 20 projects in Brazil, where it is in partnership with operator Petrobras. It has stakes in the Santos basin and the major Lula discovery. Galp has been present in Brazil since 1999, when it participated in the second bidding round for the award of exploration rights. It is now involved in 15 offshore and five onshore projects, with acreage amounting to 19,807sq km. Accumulated capital expenditure to the end of 2011 has been EUR725mn.

Eni Summary

Others Summary

Galp Energis Summary

Galp Energia participates in around 20 projects in Brazil, where it is in partnership with operator Petrobras. It has stakes in the Santos basin and the major Lula discovery. Galp has been present in Brazil since 1999, when it participated in the second bidding round for the award of exploration rights. It is now involved in 15 offshore and five onshore projects, with acreage amounting to 19,807sq km. Accumulated capital expenditure to the end of 2011 has been EUR725mn.

Eni Summary

Eni has been operating in Brazil since 1999, where it is engaged in exploration operations over a total area of 1,389sq km (with Eni's share amounting to 1,067sq km). Eni is the operator in the following blocks: Block BM-CAL-14 (100% Eni and operator) in the deep-water offshore area of the Camamu-Almada basin. Block BM-SM-857, situated in the deep-water offshore sector of the Santos basin, has not yet been assigned.

Mitsui Summary

In March 2008, Japan's Mitsui entered a Petrobras-led consortium to construct a part of the Ethanol Exports Corridor pipeline in Brazil. In November 2005, Mitsui agreed to pay US$250mn to acquire stakes in a Brazilian gas distributor Gas Participacoes (Gaspart). Mitsui wants to increase its access to Brazil's gas market and expand relations with Petrobras to gain further investment opportunities.

Maersk Oil Summary

Denmark's Maersk Oil concluded an agreement with South Korea's SK Energy in December 2010 to acquire the latter's Brazilian assets, in one of the Danish firm's biggest ever acquisition moves. Maersk announced that it had agreed to acquire SK do Brasil for US$2.4bn in cash on a debt-free basis. The acquisition comprises three deepwater blocks in the offshore Campos Basin. The first of these, BM-C-008, includes the Devon Energy-operated Polvo field, which currently represents 10,000b/d of crude output net to SK Energy.

The second block, BM-C-030, includes the Anadarko-operated Wahoo discovery, while the third block, BM-C-032, includes the Devon-operated Itaipu discovery. The latter two discoveries were to be appraised in 2011, with first oil expected by 2016-18. Maersk has also pointed to additional exploration prospectivity in the three Campos Basin blocks, which it intends to test in 2013. Pending regulatory approval, Devon's operating stakes in the BM-C-008 and BM-C-032 blocks are to be transferred to BP, as per an earlier asset sale agreement.

Maersk's latest acquisition highlights the company's expectations for Brazilian contributions to its upstream portfolio growth. In March 2010, Maersk acquired a 20% non-operating stake in the Campos Basin block BM-C-34, adding to its portfolio of interests in two other Campos blocks and three Santos Basin blocks. Maersk's chief executive told the Financial Times that the rationale behind the latest deal was exploratory rather than productive in nature, given that Maersk's net output would only rise by 1.6% post-acquisition. He also added that the Santos terminal, in which Maersk has acquired a 50% stake, would be operational by 2012.

Cosan Summary

Cosan is Brazil's largest sugar and ethanol producer. In April 2008, Cosan announced it would pay US$826mn for ExxonMobil's retail network of around 1,500 service stations throughout Brazil. The deal was the first major investment by a sugar and ethanol producer in retail fuel distribution and was an interesting move into the downstream segment for a biofuels producer, as sales of fuel ethanol overtake gasoline sales. This forward integration means Cosan becomes the first renewable energy group operating along the whole value chain - from the planting of sugar cane through to distribution, retail and wholesale.

In February 2010, Cosan signed a non-binding deal with Shell to merge their Brazilian fuel distribution and ethanol assets. Under the agreement, Shell will contribute its 2,740 service stations and up to US$1.93bn to a JV, of which US$1.63bn will be paid in cash over two years and the additional US$300mn may be paid in five years' time, based on future gains of the venture, according to a Cosan press release. Cosan will supply US$4.93bn of assets, including plants processing 60mn tpa of sugar cane and control of an ethanol trading unit. The venture will have 4,500 service stations, making it the third largest network in Brazil after Petrobras and Ipiranga (Grupo Ultra). It is likely that Shell will control fuel distribution, while Cosan may take control of the ethanol operations with 51%, according to Brazilian newspaper Valor Economico. Cosan aims to use Shell's facilities in the US and Europe to boost its exports, according to the company's chairman Rubens Ometto. The new venture will assume US$2.5bn of Cosan's debt, representing all the company's net debt.

Cosan in May 2012 agreed to pay US$1.8bn for BG Group's controlling 60% stake in gas distributor Comgas, where the other major shareholder is Shell.

Total Summary

French major Total is eyeing further stakes in Brazil's highly prospective offshore acreage following its June 2010 farm-in deal with Shell, which marked its first foray into the country. An official from the French company told Reuters that after initially deeming the geological risks of Brazil's pre-salt potential too high, it now sees it as a new region area of potential growth.

In February 2011, Brazil's petroleum agency approved Total's purchase of a 20% stake in Shell's ultra deepwater exploration block BM-S-54. The French company has highlighted the block's proximity to prolific Block BM-S-11, home of the Lula (Tupi) field. In 2010, Shell made an initial discovery on the block and the two companies are now engaged in a major drilling programme.

A Total official told Reuters that it would continue to consider similar farm-in deals but expected them to be few and far between as companies are unlikely to relinquish stakes in one of the most prospective offshore plays in the world. The company is instead looking to a long-delayed licensing round for growth opportunities, hoping Petrobras will tap IOCs for technical expertise.

Total has become operator of the deep water Xerelete concession in the Campos basin offshore Brazil, where the Xerelete heavy oil discovery was drilled in 2001. Transfer of Xerelete operatorship to Total from Petrobras was unanimous among the partners. Block interests are Total and Petrobras 41.2% and BP 17.6%.

Xerelete, in 2,400m of water 250km south east of Rio de Janeiro, contains 17-20° gravity oil. A presalt prospect has also been identified below the Xerelete structure, which lies 40km west of the Pao de Acucar discovery. Total plans to start drilling activities in 2013.

Vale do Rio Doce Summary

Rio de Janeiro-based mining conglomerate Vale do Rio Doce (Vale) has appointed Bank of Nova Scotia and Citigroup for helping it with the sale of its oil and gas exploration blocks in Brazil, reports Bloomberg, citing three people familiar with the matter. The company's oil exploration fields can be valued at up to US$1bn, one of the people said. In early May 2012, the company's CEO Murilo Ferreira said that the company is likely to take a decision regarding the possible sale of its assets by mid-2012. The company holds minority stakes in 18 oil and gas exploration blocks in the Santos, Espirito Santo, Para-Maranhao and Parnaiba basins.

Andarko Petroleum Summary

US independent Anadarko Petroleum has shelved, at least temporarily, a possible sale of Brazilian oil assets. The assets could be worth between US$3-5bn according to a source familiar with the matter, quoted by the Financial Times.

Anadarko holds exploration interests in several Campos and Espírito Santo blocks, expanding its Brazilian portfolio significantly through the acquisition of compatriot company Kerr-McGee in 2006.

In total, Anadarko holds seven Brazilian offshore blocks located in the Campos and Espírito Santo basins. The assets cover approximately 1mn acres (4,047km sq) with recent post and pre-salt discoveries at the Itauna, Wahoo, Itaipu and Coalho prospects. Itaipu and Wahoo have gross resource potential of over 500mn boe according to the company's latest appraisals.

Partex Summary

Privately owned Partex Oil and Gas Group has been present in Brazil since 2001, when it participated in the country's third licensing round. At present, Partex owns stakes in 10 Brazilian blocks, both onshore and offshore. Most of the company's assets are located in the onshore Potiguar Basin. Following the acquisition of two additional Potiguar blocks in Brazil's latest bidding round, the 10th, Partex has 50% in six blocks in the basin: POT-9, POT-513, POT-514, POT-557, POT-558 and POT-559. The remaining shareholder is Petrobras. Partex is the operator in all blocks except POT-9.Partex also holds 50% in two onshore Espírito Santo Basin blocks: BT-ES-14 and BT-ES-T-527, located in the basin. The company operates the latter. Petrobras is the remaining shareholder in both blocks and operator of BT-ES-14. In the Sergipe-Alagoas Basin, Partex has a 15% share in the offshore block BM-SEAL-9, which is operated by Petrobras with an 85% interest. Finally, in the deepwater block BM-S-10 in the Santos Basin, Partex has a 10% interest. Its partners are Petrobras (65%, operator) and BG (25%).

Sonangol Summary

In early 2010, Angola's national oil company Sonangol took over small Brazilian explorer Starfish Oil & Gas. Sonangol envisions further expansion in Brazil and was planning to spend up to US$1bn in 2010 alone. While the value of the Starfish deal was not disclosed, market sources interviewed by DCI in late 2009 put the company's price tag at around US$200mn. Sonangol is now reportedly looking for a partner for Starfish's projects.

The acquisition of Starfish is a natural step for Sonangol's Brazilian expansion plans. In January 2009, the Angolan NOC acquired Starfish's 30% stake in Block BM-S-60 in the Santos Basin, and the Rio-based explorer has also been conducting preliminary studies onshore Angola in partnership with Sonangol. Starfish holds equity in 23 exploration permits along the Brazilian coast, of which 20 are located onshore and three in shallow water.

Service Companies Summary

In early January 2010, Petrobras awarded a US$200mn contract to US oil services group Weatherford International to supply drill pipe risers for exploration programmes in the Campos and Santos basins. The five-year contract will expire in 2014 and will include installation and operation of the risers on the drilling rigs to be used during exploration.

Petrobras signed a cooperation agreement in December 2009 with US-based services company Halliburton to undertake technology and research work on three projects connected to the exploration of Brazil's pre-salt oil fields. The three-year agreement can be renewed for a further three years. It will cover research on the contamination of fluids in oil wells, studies on the solidification of salt and carbon dioxide formations and laboratory simulation of well production.

Others Summary

As part of an asset swap with Petrobras, announced in June 2008, Indian state-owned ONGC's foreign arm ONGC Videsh (OVL) received 25% stakes in three E&P blocks located in the Maranhão, Sergipe-Alagoas and Santos basins. OVL also owns 15% of Block BC-10 in the Campos Basin, which it acquired in 2006 for US$165mn. Shell operates the block with 50%, while Petrobras holds 35%. In September 2009, OVL sought the Indian government's permission to raise its capex at Block BC-10 by 27%, from US$313mn to US$400mn. Approval was granted in November 2009 for an additional US$70mn of spending, taking the budget to US$383mn. The investment is expected to raise output and prove up additional reserves. The block is expected to register peak output of 100,000boe/d by an unspecified date.

Japan's Inpex and Sojitz, via their Frade Japão Petróleo Limitada (FJPL) JV, acquired a 12.75% interest in the Chevron-operated Frade Block in 1999. FJPL's interest has since risen to around 18.3% in line with contractual arrangements. The Frade oil field came on stream in June 2009, marking the first crude to be produced in Brazil from a field with significant Japanese participation. Inpex has also been pursuing farm-in deals. The company received regulatory approval to acquire half of Shell's 40% stake in Block BM-C-31 in the Campos Basin in November 2008 and in February 2010 announced that its wholly owned subsidiary Inpex Petróleo Santos had farmed into the Shell-operated deepwater Block BM-ES-23 in the Espírito Santo Basin. Under the terms of the deal, Inpex received a 15% participating interest in the block. Other partners in the block are operator Petrobras (65%) and Shell (20%).

Brazilian exploration start-up HRT plans to reach 1mn boe/d of production by 2020, according to CEO Marcio Mello. HRT was incorporated in 2008 to bring together geoscientists from Petrobras itself, and from the ANP.


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