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Brazil’s embattled state oil giant Petrobras will get access to some US$11 billion in cash following the sale of exploration and production rights to the Carcara field to Norway’s Statoil.
While the direct gain will be just US$2.5 billion, Petrobras will be relieved of its obligations to invest US$7.9-8.6 billion in the development of the field. Petrobras’ chief executive Pedro Parente told media yesterday that the total investments needed to turn Carcara from a prospect into a producing field reach US$12-13 billion, of which Petrobras would have had to cover 66 percent.
The freed up cash will be spent on the development of other new prospects, Parente said, which are in close proximity with an already producing field operated by Petrobras, allowing the company to make the most of the synergies resulting from the stake sale.
The sale is part of Petrobras’ divestment plans, which envisage proceeds of US$15.1 billion by the end of this year. The purpose is to slim down its enormous debt pile, the largest in the oil industry, which is close to US$125 billion.
The Carcara field is one of the biggest discoveries in the pre-salt layer offshore Brazil, and has estimated recoverable reserves of between 700 million and 1.3 billion barrels of oil equivalent. The Norwegian company, which also has four other offshore projects in Brazil, plans to draw first oil from Carcara after 2020, compensating for the depletion of its older fields in its native North Sea shelf.
The Norwegian company announced a couple of days ago that it has managed to shrink production costs at its biggest new field, the Johan Sverdrup, to as little as US$25 a barrel. The reduction was made possible by cost cuts and an upward revision of production projections. The cost of the first phase of the field’s development was cut by a fifth to 99 billion kroner (US$12 bln) and the daily output plan for the first phase was raised to 440,000 barrels, from 315,000-380,000 barrels. Production is slated to start at the end of 2019.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.