By Peter Willard
The existence of a reef near the mouth of the Amazon River threatens to derail Brazil’s biggest bet to expand oil production.
Petrobras is halting a drillship’s activity at the Amazon River mouth exploration block and will put it to work at other offshore sites in the country’s southeast, the company said in an e-mailed statement.
Meanwhile, the company is appealing a decision earlier this month by Brazil’s environmental agency Ibama to block drilling near the 9,500-square-kilometer reef.
Petrobras has been waiting for approval to use the platform since early December.
By some estimates, the six-month stalemate has cost the company as much as US$200 million.
Ibama said it could take up to a year to decide whether or not exploration near the reef can go ahead.
Petrobras’ chances of increasing oil production are dwindling.
The Equatorial Margin in northeast Brazil, where the reef is located, is the main target for exploration spending in the company’s five-year business plan, with US$3 billion currently earmarked for the region.
This is a shift in focus following lackluster results in the country’s traditional southern basins, known as the pre-salt region.
Petrobras has said that, after 2030, production will decline unless it finds more oil.
Petrobras also sold most of its exploration assets abroad during the past decade, when it thought it would continue to make big discoveries in the Santos and Campos basins, where almost all of its oil is produced.
The company is betting that the Equatorial Margin could hold reserves similar to the multibillion-barrel discoveries Exxon Mobil Corp. is developing to the north in Guyana.
“The Equatorial Margin became very important after the disappointments in the Santos Basin,” said Marcelo de Assis, director of exploration and production research in Latin America at consultancy Wood Mackenzie Ltd.
“Petrobras has almost no international reserves,” he added.
“Petrobras has almost no international assets. They have nowhere else to go.”
With information from Bloomberg
News Brazil, English news Brazil, Brazilian oil production, Petrobras