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Energyboardroom.com Releases New Brazil Oil and Gas Report

11.04.2014 / Energyboardroom

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In some places, confidence in the Brazilian oil and gas sector is high, with Petrobras recently announcing an ambitious plan of investment expending USD 236.7 billion until the end of 2017 to exploit offshore resources. However, these promises are tempered by the fact that OGX (now Óleo e Gás Participações SA) announced that its Tubarão Azul operations were a commercial calamity in July. Almost three months later, OGX filed for bankruptcy. In November 2013, HRT, another indigenous Brazilian enterprise, had drilled 14 wells: failing to obtain oil from any. EnergyBoardroom’s new report on the Brazilian oil and gas sector, available now for free download, assesses the myths and realities currently driving opinions in the Brazilian oil and gas sector.

Brazil OnG 2014

Many commenters display morbid glee at indications of tumult affecting Brazil, particularly troubles affecting Petrobras. This schadenfreude, however, ignores socio-economic imperatives surrounding the oil and gas industry. Brazilian policy-makers acknowledge the importance of this opportunity and that it represents a golden path to economic development. Despite undoubted risks to entering the Brazilian market, the rewards available could be transformative for any business savvy enough to pilot a route to success.

For investors looking to Brazil, research and development is vital to reducing perceptions of risk. Asked about the importance of further investment in R&D, Marcos Isaac Assayag, formerly executive manager of Petrobras’ R&D Center, Centro de Pesquisas Leopoldo Américo Miguez de Mello (CENPES) says, “Continuing to invest in R&D on top of what is done already is a must. Certainly we can create a lot more value by optimizing drilling operations, so that we could drill faster, cheaper and safer, or by improving recovery factors so that we could extract, with the same number of wells, more oil from the reservoir.”

The technical challenges in Brazil are seeing the arrival of highly sophisticated, technically adept companies gathering to capitalize on Brazil’s subsea wealth, despite the risks described. This technology helps the companies reduce risk. It is unlikely that Petrobras’ aim of producing an additional two million barrels per day by 2020 would be accomplished without using new technologies on mature fields. Almir Barbassa, CFO of Petrobras, highlights that the NOC’s strategy is one with finesse: “Operational efficiency is tied to our producing fields, but we have offshore fields that have been producing for thirty years, so the equipment is no longer new and has to be improved in ways. We did most of this in the last two years, essentially in the second half of last year and the first half of this year. Now we are seeing production responding.” Petrobras is targeting both new resources and ensuring productivity from existing assets remains high with technologies capable of delivering greater results than previously.

Featuring:

Almir Barbassa, CFO – Petrobras

Renato Bertani, CEO – Barra Energia

Denis Palluat de Besset, Managing Director – Total E&P Brazil

Marcos Assayag, former Executive Manager – CENPES

João Carlos de Luca & Milton Costa, President & Executive Secretary – IBP

Stephane Dezaunay, Country Manager – PGS

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