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Brazil Adds To Supply Glut With Major Deepwater Field

International oil majors and Brazil’s state oil firm Petrobras have just announced first oil from a deepwater field in Brazil’s pre-salt Santos basin, which will add 150,000 barrels of oil per day to the production of the second-biggest contributor to non-OPEC oil supply growth.  

France’s Total said on Friday that the Iara license in the Santos basin began production at a floating production, storage, and offloading unit (FPSO), with capacity of 150,000 bpd of oil and 6 million cubic meters of natural gas daily. A second FPSO, also with 150,000 bpd capacity, is expected to start operations next year.

Total holds 22.5 percent in the field, whose operator is Brazil’s Petrobras, while Shell has a 25-percent stake in Iara.

Both Total and Shell touted the start of production as expanding their already sizable portfolio in the prolific pre-salt areas offshore Brazil.

“First oil from Iara is a new milestone for Total in Brazil. It increases our share of production from the highly prolific pre-salt area, adding to current output from the Total-operated Lapa field, and the extended well tests under way on the Mero field,” said Arnaud Breuillac, President Exploration & Production at Total.

Shell’s Upstream Director, Wael Sawan, said that “It has been a banner year for Shell Brasil,” noting that Shell has also won new acreage.

“Brazil is home to some of the best deep-water opportunities in the world and we look forward to working with Petrobras and other partners to progress additional development plans,” Sawan added.

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The start-up of Iara production comes a week after major oil companies snubbed Brazil’s highly-anticipated oil actions, due to the massive upfront payments and complex royalty schemes.  

Still, the majors continue to develop projects in Brazil, and the country is set to be the second-largest single contributor to non-OPEC oil supply growth this year and next, second only to the United States.  

According to OPEC’s latest Monthly Oil Market Report (MOMR), Brazil’s oil production will grow by 190,000 bpd this year and by 290,000 bpd next year.  

By Tsvetana Paraskova for Oilprice.com

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