Royal Dutch Shell, Europe’s largest oil company, expects to make robust investments in Brazil’s offshore resources, hoping to quadruple oil and gas output of the country by 2020, while predicting that oil prices would rebound this year to levels that would allow production in Brazil’s ultra deepwater fields to break even, Reuters reported.
Shell is a leading investor in Brazil’s offshore fields — known as pre-salt because they lie under a layer of the compound — and has strengthened its position through the $52b takeover of BG Group. But the collapse in the oil price, with Brent crude trading about $30 a barrel, has raised questions among investors about the viability of the Brazilian fields, according to Financial Times.
Nevertheless, thanks to BG’s large portfolio of assets in Brazil and Shell’s decision to buy 20% of the giant Libra offshore project in 2013, Brazil will be a key area for the Anglo-Dutch company as it focuses on liquefied natural gas and deepwater oil production, Shell CEO, Ben van Beurden, said. By adding BG’s large Brazilian offshore assets, Shell’s local output rose six-fold to about 240,000b/d of oil and natural gas equivalent (boepd), or 13% of Shell’s total of 1.8m boepd
Shell is rushing in as other companies cut back in the face of Brazil’s worst recession in decades, and as a plunge in oil prices and a corruption scandal at state-run Petroleo Brasileiro SA that has slowed local oil and gas growth.