• 3 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 7 minutes Saudi and UAE pressure to get US support for Oil quotas is reportedly on..
  • 11 minutes China devalues currency to lower prices to address new tariffs. But doesn't help. Here is why. . . .
  • 15 minutes What is your current outlook as a day trader for WTI
  • 4 hours Domino Effect: Rashida Tlaib Rejects Israel's Offer For 'Humanitarian' Visit To West Bank
  • 5 hours In The Bright Of New Administration Rules: Immigrants as Economic Contributors
  • 5 hours Will Uncle Sam Step Up and Cut Production
  • 3 hours Gretta Thunbergs zero carbon voyage carbon foot print of carbon fibre manufacture
  • 4 hours Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.
  • 7 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 1 day US Petroleum Demand Strongest Since 2007
  • 9 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 day Movie Script: Epstein Guards Suspected Of Falsifying Logs
  • 17 hours Significant: Boeing Delays Delivery Of Ultra-Long-Range Version Of 777X
  • 17 hours Why Oil is Falling (including conspiracy theories and other fun stuff)
  • 23 hours Strait Of Hormuz As a Breakpoint: Germany Not Taking Part In U.S. Naval Mission
Alt Text

Oil Erases Gains On Crude Inventory Build

Crude oil prices fell further…

Alt Text

OPEC Oil Production Continues To Slide As Saudis Cut Deeper

OPEC’s crude oil production fell…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Premium Content

The World's Biggest Offshore Boom Is Accelerating

In a sign that Brazil’s offshore sector is competitive in a world of $50–$60 oil prices, two large oil companies just announced significant investments in oil fields in the South American nation.  

Total SA announced on Monday a final investment decision in a massive offshore oil field in Brazil’s Santos Basin, and the French oil giant boasted of low production costs. “The decision to launch the large-scale development of the Libra field is a major step for Total in Brazil,” Arnaud Breuillac, Total’s President of Exploration & Production, said in a statement. “We have worked with Petrobras, the operator, and our partners to secure technical costs below 20 dollars per barrel. This proves that we are capable of developing competitive deep offshore projects.”

The Libra field is located about 180 kilometers off the coast of Rio de Janeiro in ultra-deep water, a pre-salt field that is considered to be Brazil’s largest discovery, with estimated reserves of between 8 and 12 billion barrels. It was discovered in 2010 and dramatically raised expectations for future growth, ushering in a period of bullishness and confidence in the country’s direction.

The field is finally getting some large-scale investment for development. Total said it would use a floating production storage and offloading (FPSO) unit that would have a production capacity of 150,000 bpd and 17 wells. It is expected to come online by 2021. But more FPSOs will be added to eventually scale up output to 600,000 bpd.

Statoil made a separate announcement on Monday, agreeing to take a 25 percent stake in Brazil’s Roncador field, an acquisition from Petrobras valued at $2.9 billion. The Roncador field has been producing for almost two decades, and as of November it was producing 240,000 bpd.

Statoil has expertise in squeezing more oil out of mature fields. Roncador is thought to hold 10 billion barrels of oil equivalent (boe), with about 1 billion boe remaining. Statoil is confident it can boost that figure 1.5 boe. The move will triple Statoil’s production in Brazil to 110,000 bpd.

The investment announcements are significant because Brazil is picking up momentum after years of disappointment. Petrobras had to repeatedly downgrade its forecast for production growth, succumbing to a future of more modest ambitions. The state-owned oil company can claim the mantle of the most indebted oil company in the world, a debt pile that once vastly exceeded $100 billion.

It has significantly cut down on its outstanding debt by selling off assets and savagely cutting spending. With Petrobras unable to go it alone and develop a lot of the oil fields that it might want to, it has had to turn to international companies.

Related: Saudi Arabia’s Big Oil Gamble

A major policy change last year opened up Brazil to investment from international oil companies. Up until 2016, Petrobras had to lead on all pre-salt projects and own at least 30 percent of any given project. International companies, such as the oil majors, had to take on junior roles.

But the energy reform—passed amid much controversy—has allowed the oil majors to move into the pre-salt. The early results are promising for Brazil and for those companies. Investment is rising and so too is production.

In October, Brazil held an auction for offshore assets, a sale that was met with strong interest. Royal Dutch Shell, which already had a huge presence in Brazil, purchased half of the awarded blocks. ExxonMobil and BP also successfully acquired some offshore acreage.

So far in 2017, Brazil has averaged 3.3 million barrels per day of crude oil and liquids production, up 100,000 bpd from last year. But the sharp increase in recent years has largely come from the pre-salt oil fields in ultra-deep water that are located beneath a thick layer of salt.

(Click to enlarge)

Pre-salt production surpassed 1 mb/d in 2016, an increase of 33 percent from the year before. Related: Oil Market On Edge Following Outages

The success of the pre-salt to date is a positive sign for Brazil. Just a few years ago, it seemed possible that the pre-salt would fall by wayside when oil prices tanked. Drilling in waters of such depth requires a lot of investment, a prospect that appeared to be a luxury few could afford after the market meltdown in 2014.

But the eagerness with which the oil majors are entering Brazil demonstrates that the pre-salt can survive, and even thrive, in a world of $50 to $60 oil. We have heard much about the oil majors jumping into Texas because of the short-cycle nature shale drilling, so the fact that Total is moving forward with such a large project in Brazil’s pre-salt is a testament to region’s competitiveness.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment
  • Bill Simpson on December 26 2017 said:
    I guess someone knows how all that oil got under that layer of salt.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play