Brazil’s Petrobras makes new subsalt discovery in Campos Basin block

  • Feb 01, 2021
  • Investing

Brazil’s state-led oil company Petrobras discovered hydrocarbons in the C-M-411 block located in the offshore Campos Basin, the company said Jan. 29.

“The data from the well will be analyzed to better guide exploratory activities in the area and the potential of the discovery,” Petrobras said. The discovery was made in the 1-BRSA-1377-RJS well, which was named Urissane.

The C-M-411 block is located about 200 km offshore in waters that are 2,950 meters deep, Petrobras said. The oil discovery was made in reservoirs in the subsalt section of the block, according to the company.

The find kicks of Petrobras’ latest drilling campaign, which is primarily focused on offshore blocks holding subsalt potential that the company acquired at a series of bid rounds that started in 2017. Petrobras purchased exploration and production rights to the C-M-411 block at Brazil’s 17th bid round, held in 2017. The auction featured heated bidding for blocks holding subsalt potential that were outside the so-called subsalt polygon that requires production-sharing contracts to develop.

The auction featured the return of US heavyweight and Petrobras partner ExxonMobil, which had left Brazil in the early 2010s after an unsuccessful subsalt drilling campaign with partner Hess Corp. Petrobras owns a 50% operating stake in the block, while ExxonMobil retains the remaining 50%.

In addition to the C-M-411 block, Petrobras also purchased stakes in the C-M-210, C-M-277, C-M-344, C-M-346 and C-M-413 blocks. The blocks are all located in a group together about 200-300 km off the coast of Campos dos Gotyacazes in Rio de Janeiro state and due east of many of the Campos Basin’s biggest deepwater producers such as Marlim and Roncador as well as northeast of the Equinor-operated BM-C-33 block that contains several subsalt discoveries.

Similar blocks led to bidding wars during concession auctions held in 2017-2019, which feature more-favorable rules than production-sharing auctions. Production-sharing contracts require oil companies to give Brazil a set percentage of profit oil, or production after certain costs are paid. The contracts are also managed by government umbrella company Pre-Sal Petroleo SA, or PPSA.

Under the concession system, oil companies own the oil and natural gas discovered and pay royalties and special-participation taxes on production. Concession contracts also allow oil companies to develop projects on their own terms rather than under government watchdog PPSA.

Brazil expects to hold the 17th bid round, which was delayed by the coronavirus pandemic in 2020, on Oct. 7. The sale will feature 92 offshore blocks, including similar areas on the fringe of the subsalt polygon in the Campos and Santos basins that could hold subsalt potential.

The 7th subsalt production-sharing auction and second transfer-of-rights sale are also expected to be held in the second half of 2021, according to Mines and Energy Minister Bento Albuquerque.

Atapu pumped first oil in 2020, while Sepia is expected to come onstream in 2021.

Brazil’s oil and gas officials pledged to improve terms after international oil companies sat out the 6th production-sharing auction and first transfer-of-rights sale. The exploration blocks are expected to be made larger, while signing bonuses and minimum profit-oil guarantees could be lowered. Brazil’s Congress is also debating potential changes to the subsalt production-sharing regime, including the potential elimination of the subsalt polygon.

Source: Platts