Brazil's declarations of commerciality for new O&G fields fall to 20-year low

Bnamericas Published: Thursday, January 19, 2023
Brazil's declarations of commerciality for new O&G fields fall to 20-year low

Only two new oil and gas fields – both onshore – were declared commercial in Brazil in 2022, the lowest number for two decades, according to data from the local watchdog ANP analyzed by BNamericas. 

Irara and Gavião Mateiro, located in the Espírito Santo and Parnaíba basins, respectively, were registered in April and November last year. 

The former, in block ES-T-496, is operated by BGM Petróleo e Gás, and the latter is block PN-T-102A and operated by Eneva

BNamericas spoke with two local experts about the exploration and production (E&P) outlook:

Marcelo de Assis, research director at Wood Mackenzie

"The decrease [in declarations of commerciality] is related to the lack of new discoveries that are progressing in the development pipeline. Unfortunately, the expectation of new world-class discoveries in the Brazilian pre-salt has not materialized. 

"Of all the blocks auctioned since 2017, only two are moving to the appraisal phase: Alto de Cabo Frio Central and Aram, both operated by Petrobras.

"Brazil's output curve is expected to grow during this decade, peaking in 2030-31. New FPSOs in Mero, Búzios, Atapu, Itapu and Sépia are mostly responsible for the production growth.  

"Even major discoveries (over 2Bboe recoverable) will be partially offset by the expected decline in fields like Tupi, Iracema or Sapinhoá.

"The perspectives for 2023 are:

  1. Production from independent/mid-cap companies to continue increasing;

  2. Petrobras will start exploration activities in the Brazilian equatorial margin hoping to replicate the same success as in Guyana;

  3. Revised 5-year plan for Petrobras following the guidance from the new government;

  4. We expect more clarity about refining activities, fuel pricing policies, renewables and energy transition;

  5. Clarity about the next bid rounds – open acreage model or a different one."

Sofia Forestieri, upstream analyst at Rystad Energy

"Of the offshore wells drilled last year, only two had their finds confirmed and announced as commercial: Curaçao, in the Aram [Petrobras-operated] block, and 4-BRSA-1386D-RJS, known as Pendúnculo, in the northwest portion of the Sépia field. 

"The other wells were either dry or didn't show commercial volumes. However, exploration activity is set to increase in 2023, with over 15 wells planned to be drilled in the Campos, Santos, Sergipe-Alagoas, Potiguar and Foz do Amazonas basins. 

"Petrobras' Morpho-1 well, in the Foz do Amazonas basin, is highly anticipated given the region's resource potential and as the first well in 32 years to be drilled in that basin. 

"Later in the decade we also expect Petrobras to focus its exploration efforts on the equatorial margin, with over 10 wells to be drilled initially in the Foz do Amazonas and Barreirinhas basins. 

"Brazil has a robust approval pipeline in place for the next three years with no fewer than 20 projects expected to be approved and at least 10 new FPSO awards. 

"That being said, the current outlook sees production surpassing the 5Mb/d mark by 2029. If more discoveries are made and this aforementioned yet-to-find potential is unearthed, Brazil could be looking at output close to 6Mb/d by the mid-2030s.

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