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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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Brazil’s Pre-Salt Deepwater Blocks Ready For Auction

This Friday, Brazil’s deepwater pre-salt blocks will go on auction, and all eight blocks are likely to be awarded, according to senior officials.

The country is set to auction the blocks located in the Atlantic Ocean during the first such event in four years.

“The success rate in the pre-salt is higher than anywhere else,” Petrobras CEO Pedro Parente said. “You need to be where there is high productivity and a low cost of lifting. Pre-salt is one of these areas. So I would be surprised if it is not competitive. I expect all of the blocks to receive bids.”

Petrobras plans to bid on three blocks of interest, but Parente declined to name the companies it plans to work with to compete for those tenders.

Shell is confident that it can produce oil from Brazil’s promising prolific pre-salt layer for less than $40 per barrel; that’s why the supermajor is taking part in the Brazilian auction, Wael Sawan, Executive Vice President Deepwater at Shell, told Reuters on Wednesday.

The pre-salt layer holds high-quality and prolific oil reserves, and recent Brazilian reforms have made them more attractive assets, Sawan told Reuters on the sidelines of an oil industry event in Rio de Janeiro. Shell believes that it can extract oil from those fields below its targeted breakeven cost of $40 a barrel, otherwise it would not have taken part in the auction, Shell’s manager noted.

Shell and Brazil’s Petrobras signed last month an agreement to set up a long-term cooperation initiative to develop pre-salt fields in Brazil. Shell is already strategic partner of Petrobras in the pre-salt layer, holding minority interests in the Libra and Lula fields and in other areas such as Sapinhoá, Lapa, and Iara, all of which are located in the Santos Basin. Currently, Petrobras and Shell are partners in ten exploration and production consortia, each operating in five blocks.

By Zainab Calcuttawala for Oilprice.com

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