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23 December 2011

Petrobras rushes to pre-salt in Angola

There is an interesting piece of news in the press these days, it seems Petrobras shall start exploratory drilling in the south-eastern Atlantic pre-salt already next year. After a series of contracts having been signed with several international companies for the exploration of 32 000 km2 off Angola, the Brasilian state owned company seems willing to take the lead. Some media are reporting as if the existence of oil or gas is almost a certainty, but in reality little is known about the region. Part of the 5-year contracts signed is a 3D seismic survey of these blocks.

It really isn't easy to interpret this rush to the west African coast, while in Brasilian waters the pre-salt is probably not fully known yet. My feeling is that Petrobras is above all trying to affirm its technical leadership on ultra/hyper/mega deep offshore. In second place is possibly the confidence by Petrobras engineers on finding petroleum in a geological setting very similar to that in the Brasilian coast. And finally there is also a hint of long term thinking, insulating exploratory activities from short term price swings or economic uncertainty; there's nothing really quite like petroleum after all.

It is also worth pondering on the sums involved. Petrobras alone is investing over 200 G$ in exploratory activity during the next three years. This is more or less on par with the yearly GDP of a state like Portugal. One can't avoid thinking that such sums applied (even if partially) to exploring uncertain and complex plays as the Atlantic pre-salt may be telling something deep about the long term viability of international oil companies.

Finally it is important to note that this is another small step in Brasil's emergence as a dominant power in the southern hemisphere. Not only in the oil & gas industry but also in agriculture, Brasil is weighting in its expertise and investment cushion. Conveying this domination is the fact that the sub-Saharan countries with better perspectives on these industries are also members of the Community of Portuguese Speaking Countries. All the eight countries in this community have jurisdiction over relevant parts of the Ocean, and in all of them exploratory drilling activities shall take place during the next decade. Petrobras and Brasil will certainly play a leading role in whatever developments may unfold.

Bloomberg
Petrobras to Expand Pre-Salt Oil Drilling to Angola in 2012
Rodrigo Orihuela - Dec 20, 2011

Petroleo Brasileiro SA (PETR4), Latin America’s largest company by market value, said it will start drilling oil in deep waters off Africa early next year on bets the area may mirror Brazilian deposits across the Atlantic.

[...]

Oil companies are lining up to explore reserves in Angolan deep waters because they are “believed to be analogous to pre- salt Brazil,” Tim Dodson, vice president for exploration at Statoil ASA (STL), said in a statement today. BP Plc, Statoil, Repsol YPF SA (REP), Total SA (FP) and ConocoPhillips (COP) were among companies that won licenses to drill in Angola’s pre-salt area today.

[…]

Petrobras plans to invest $224.7 billion through 2015 as it prepares to tap the pre-salt reserves, which included the biggest discovery in the Americas in the past three decades.