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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Multinational Majors Announce Billion-Dollar Investment In Brazilian Oil Field

Brazil thinks it can do it all as it refuses to curb fossil fuel production, despite IEA warnings, while expecting to still meet environmental goals. Meanwhile, Equinor, ExxonMobil, and Petrogal Brasil agree on the huge phase one development of Brazil’s Bacalhau oil field.

This week, Norway’s Equinor, ExxonMobil, and Petrogal Brasil have announced an $8 billion phase one development of Brazil's Bacalhau oil discovery. The former two oil majors have a 40 percent stake each in Bacalhau, with Petrogal holding 20 percent. 

The Bacalhau oil field contains light oil with minimal contaminants. It is situated around 185km off the Ilhabela, Sao Paulo coast at a depth of 2,050m. 

Equinor will manage operations at the oil field, with first oil expected by 2024. Output could be as high as 220,000 bpd in the major discovery, according to the companies. The break-even price of the oil is an optimistic $35 per barrel, just half the current brent benchmark price for crude at present. 

Equinor Executive Vice President Arne Sigve Nylund stated of the development, “This is an exciting day. Bacalhau is the first greenfield development by an international operator in the pre-salt area and will create great value for Brazil, Equinor and partners.” Going on to say, "Estimated recoverable reserves for the first phase are more than one billion barrels of oil".

Phase one will consist of the drilling of 19 subsea wells, which will be tied back to a floating production, storage, and offloading unit (FPSO), one of the largest FPSOs in Brazil. Stabilized oil will be offloaded into shuttle tankers while gas will be re-injected in the reservoir.

The project, which has several international investors, is expected to have “ripple effects in the supply chain and local job creation”, according to Veronica Coelho, Equinor’s country manager in Brazil.

According to Equinor, the Bacalhau development not only offers low breakeven but also low carbon emissions. The three companies have made efforts to reduce emissions throughout the production phase by implementing a Combined Cycle Gas Turbine system to increase the energy efficiency of the power station, to provide an efficient electrical power production and flexible heat supply.

The lifetime average CO2 intensity in an anticipated 9kg per barrel produced. This is substantially less than the global average of 17kg per barrel. In addition, the companies are committed to implementing the latest carbon emissions-cutting technologies in the field as the project evolves. 

Related: Oil Rises After ‘Cataclysmic’ Boardroom Showdown

This is important as Brazil’s Energy Minister, Bento Albuquerque, has stated net-zero aims despite the government’s unwillingness to curb hydrocarbon exploration and oil production.  

In May, the International Energy Agency (IEA) called on countries around the world to halt their fossil fuel exploration and production projects as a means of cutting carbon emissions and meeting green goals. However, Albuquerque says this is not necessary for Brazil to achieve net-zero by 2050. “I understand this is desirable but at the moment it’s not possible,” Albuquerque stated

The Minister went on to say, “In Brazil, we will keep on with our exploration and mainly production programme of our hydrocarbon reserves, and we will keep on in parallel with the expansion of our energy matrix, making it more and more clean and renewable”.

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Brazil, the world’s eighth-biggest oil-producing state, is optimistic in its ability to achieve landmark green goals while continuing to develop its oil and gas industry, as seen through the major new investment in the Bacalhau oil field by both foreign and national players. 

By Felicity Bradstock for Oilprice.com 

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