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With large-scale project opportunities for oil and gas development on the decline, supermajors are turning to smaller endeavors that yield faster returns—but they haven’t entirely given up on big projects, such as the development of Brazil’s pre-salt layer.
Shell has just announced it will spend as much as US$10 billion over the next five years on oil and gas projects in South America’s largest economy, taking quick advantage of a legislative change aimed at encouraging more foreign companies’ participation in the country’s energy industry.
Early last month, the Brazilian Senate scrapped the obligation to local state-owned giant Petrobras to act as operator of all oil and gas projects in the pre-salt deposits in the Brazilian shelf. Now, any energy company can become the operator of a project in the area.
Petrobras has proven unable to effectively exercise control over these resources on its own, especially after it came to light that senior executives at the company were involved in a wide-scale graft scandal, and also that the company’s debt had swelled to over US$100 billion, the largest in the industry.
Shell is already the largest foreign investor in Brazil, Reuters notes. Some of its assets there it acquired with the purchase of rival BG Group and others, such as its stake in the huge Libra field in the pre-salt that it bought before the acquisition.
Brazil has recently stated its intention to raise its crude oil production, despite still weak prices. In fact, it disappointed OPEC when it said this, as the cartel was counting on some weighty non-OPEC producers to join its production-cutting efforts to push up oil prices.
The latest production figures for Brazil were record-highs: in September, 2.67 million bpd were pumped in the country, up 2.4 percent on August and 11.5 percent on September 2015. This was the fourth month of production increases in a row.
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.