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The World’s Biggest Oil Discovery Just Opened For Foreign Ownership

Offshore pre salt

There’s a silver lining to the current downturn in oil prices. It’s bringing out some very good assets for sale.

And this past week saw a first-of-a-kind oil project come available — in one of the most important oil and gas plays to emerge globally over the last few decades.

The pre-salt of offshore Brazil.

The billion-barrel potential of Brazil’s pre-salt has been recognized for years. But getting into this big-upside play hasn’t been easy — given that blocks here were tightly controlled by Brazilian state developer Petrobras. With foreign operators generally confined to minority stakes in partnership with the major.

But on Friday, Petrobras did something it’s never done before. Sold a majority stake in a pre-salt block to a outside entity.

That was Norway’s Statoil. Which Petrobras confirmed has agreed to purchase a 66% stake in the BM-S-8 block — for total consideration of $2.5 billion.

This marks the first outright sale of a pre-salt project by Petrobras. Which up until now had been the majority owner and operator of this project — along with minority stakeholders including Portugal’s Galp Energy, as well as two smaller Brazil-based firms.

But the recent drop in oil prices is changing Petrobras’ attitudes towards its portfolio. With the company now aggressively looking to sell assets in order to pay down debt.

This project sale also comes as Brazil’s government has been seriously discussing opening the pre-salt up to a “concession model” of development. Where private operators would be able to bid on blocks like in many other parts of the world, rather than relying on partnerships with government.

This week’s sale is a sign that such steps toward opening the pre-salt are gaining momentum. Signalling that some big opportunities could be coming up here, for operators with the cash position to get into this big-money play. Watch for more project sales and license offers coming here.

Here’s to letting it go.

By Dave Forest

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