• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 12 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days How Far Have We Really Gotten With Alternative Energy
  • 3 hours The United States produced more crude oil than any nation, at any time.
  • 23 hours China deletes leaked stats showing plunging birth rate for 2023
  • 6 hours The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
  • 5 days Bad news for e-cars keeps coming
Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Brazil's Oil: Less Mega Than You Think

Word last week that offshore oil players may not be impressed with Brazil's massive pre-salt prospects. At least, not as impressed as Brazilian officials think.

Several industry players under the banner of the Americas Society/Council of the Americas Energy Action Group released a report analyzing investment in Brazil's billion-barrel pre-salt prospects. The group concluded that potential bidders for these fields may be deterred by poor fiscal terms.

One of the biggest stumbling blocks is state participation. The current rules call for Brazilian state oil firm Petrobras to operate all pre-salt fields. The firm must also hold a minimum 30% stake in each project.

The report raises an interesting question: does Petrobras have the skill and manpower to operate a large number of projects here? The government has estimated that the massive Libra field alone (8 to 12 billion barrels) will cost $174 billion to develop. That alone is a lot to chew alone. Let alone with several other developments going in tandem.

With the warning issued, the government could now alter the fiscal terms of its production sharing contracts to make investment more attractive. Or it could ignore the these forebodings and wait to see if E&Ps will balk when it comes to bid time.

The risk is that a failed bid round could take a lot of the steam out of the pre-salt play. Even in the best-case scenario it will be several years before the massive fields here start producing. Any delays in licensing could set the timeline back to a decade or more.

Brazil will likely stick to its fiscal guns. Opinion right now is that deepwater exploration is one of the only plays going that's big enough to matter for major E&Ps. The Brazilians know they're one of the only games in town on this front.

But they're the not completely alone. The deepwater U.S. Gulf of Mexico is still active. And drilling is picking up in offshore West Africa.

This is the time you, as a hydrocarbon agency, have to ask: are we really as attractive as we think?

Here's to realism,

ADVERTISEMENT

By. Dave Forest


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News