Spain’s energy conglomerate Repsol has had an interesting few months in Latin America.
In 1999 Repsol bought Argentina’s Yacimientos Petroliferos Fiscales (YPF), creating Respol-YPF to begin exploiting Argentina’s vast Vaca Muerta shale gas concession, estimated to contain nearly 22.5 billion barrels of recoverable oil and natural gas. Battered by rising energy import bills and frustrated by Respol-YPF’s sluggish development of the concession, last month the Argentinean government nationalized the concession, provoking howls of protest not only from Repsol but the European Union as well. Repsol promptly demanded $10.5 billion in compensation.
But don’t cry for me, Repsol. Repsol’s first quarter 2012 results indicate that the company is still doing quite well despite the Argentinean debacle, as it posted net income of $804 million, 12.4 percent higher than the $716 million reported in the year-earlier period. Including YPF, quarterly net profit rose to $991 million, an improvement of 3.5 percent from $957 million in 2011.
Accordingly, Repsol’s brave new frontier in Latin America is Brazil.
Repsol has shares in 21 blocks of the main Brazilian southern Atlantic offshore Pre-Salt exploratory basins: Campos, Santos and Espirito Santo. The three combined total 57,529 square miles. Repsol is the first private company in offshore mining exploration in these basins.
In the Campos BM-C 33 block, operated by Repsol, the company has a 50 percent stake, and Norway’s Statoil the other 50 percent share. For the Campos BM-ES 29 block, also operated by Repsol, the firm has a 40 percent share, with Colombia’s Ecopetrol owning 30 percent and Statoil the remaining 30 percent.
In its seven Santos basin concessions, Repsol began operations in September 2007. In Piracuca, Brazilian state oil firm Petrobras owns 63 percent and Repsol the remaining 37 percent. For Panoramix, Repsol owns 40 percent, Petrobras 35 percent, Brazil’s Vale and Australia's second largest oil and gas producer Woodside Petroleum 12.5 percent apiece. For the Vampira concession Repsol has a 40 percent stake, Petrobras 35 percent, Vale and Woodside Petroleum 12.5 percent apiece. In the Carioca offshore concession Petrobras has a 45 percent share, Britain’s BG Group plc 30 percent and Repsol the remaining 25 percent. For Guara, Petrobras retains a 45 percent share, BG Group plc 30 percent and Repsol 25 percent. In the Iguazu offshore field Petrobras has 45 percent, BG Group plc 30 percent and Repsol 25 percent. For the Abare Oeste field, the figures are Petrobras - 45 percent, BG Group plc 30 percent and Repsol 25 percent.
In the Espirito Santo BM-ES 1 concession, Respol 10 percent share, Petrobras 80 percent and VALE 10 percent. In the Espirito Santo concession, which Repsol operates, the firm has 40 percent, Ecopetrol has a 30 percent stake, and Norway’s Statoil 30 percent.
The upshot of the mind-numbing figures above is that they give credence to the Argentinean government charge’s that Repsol YPF was not only dragging its feet in bringing Vaca Muerta online, but was also using profits from the concession to bolster Repsol’s investments elsewhere, particularly in Brazil.
Certainly Repsol executives have reason to salivate over their Brazilian holdings, as Brazilian offshore waters are one of the areas with the highest hydrocarbon reserves growth in the world. On 24 May the company announced that its joint venture, Repsol Sinopec Brasil, estimated that its deepwater Campos Basin Block BM-C-33 concession contains resources of more than 700 million barrels of light oil and 3 trillion cubic feet (Tcf) of gas. Repsol Sinopec Brasil was established in late 2010 to develop exploration and production projects in Brazil, with Repsol having a 60 percent stake and Sinopec the remaining 40 percent.
Pressing forward, Repsol Sinopec Brasil and its partners are preparing an appraisal plan to be submitted to the Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis (Brazilian National Agency of Petroleum, Natural Gas and Biofuels, ANP).
Repsol’s future indeed looks bright in Brazil.
The good news is that YPF announced the recent discovery of 150 million barrels worth of shale oil.
The bad news is that The European Union challenged Argentine import restrictions at the World Trade Organization in a case linked to the Repsol YPF nationalization. In a statement the EU said, “While the EU’s WTO action on import measures is separate from and independent to Argentina’s Repsol case, the EU is responding to Argentina’s broader and systematic economic restrictions. The Repsol case, like the trade restrictive import measures the EU challenges today, is rather to be seen as an expression of the same worrying policy pursued by Argentina.”
So, it would seem that Argentina’s energy reserves will continue to be developed despite the whining of Brussels’ Eurocrats and without the participation of Repsol’s conquistadors.
By. John C.K. Daly of Oilprice.com