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Statoil Increases Brazilian Operations Despite Analyst Warnings

Norwegian oil producer Statoil is hoping to expand its operations in Brazil by entering a second phase of exploration at the Peregrino offshore oilfield.

As reported by Norwegian Solutions, the next phase of exploring will be done with its Chinese partner - the Sinochem Group - at Statoil’s largest non-Norwegian offshore operation. Initially explored in 2011, output at Peregrino surpassed 100 million barrels of oil for the first time last year.

The continued exploration “will add about 250 million barrels of recoverable reserves,” said a Statoil spokesperson.

“The expectation is to expand production. In all, 22 wells – 15 producers of oil and seven water injectors – should be drilled in Peregrino phase two”.

The spokesman also confirmed Statoil’s commitment to Brazil, which included around one thousand employees manning both onshore and offshore operations as well as running eleven tankers.

“Brazil remains one of the most important countries in Statoil’s international strategy. We intend to keep it that way,” the spokesman said.

Analysts have warned Statoil about boosting their investment in Brazil such as the US$2.5 billion purchase of the Petrobras’s operating interest of 66 percent in the BM-S-8 offshore license in the Santos basin.

“It’s a world class asset,” Executive Vice President Tim Dodson said to Bloomberg about the field estimated to hold between 700 million and 1.3 billion barrels equivalent of recoverable oil. Nevertheless, Norwegian oil experts warn that oil prices will need to rise to US$70 to 80 per barrel in order for Statoil to profit off the BM-S-8 site.

By Erwin Cifuentes for Oilprice.com

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