By Carlos Graffigna, Contributing Reporter
RIO DE JANEIRO – Continuing with what has been their main business focus over decades, oil giant BP purchased from Devon Energy their assets off the coast of Brazil, allowing them to use their renowned experience in deep water oil exploration and production.
The deal gives BP access to Brazil’s Campos and Camamu-Almada basins, both of which have water depths from 100 meters to 2,780 meters. With prices for crude oil three times higher than historic prices, fields which were financially not viable, have become hot commodities and their exploitation is just a matter of time.
Devon Energy originally partner with Petrobras, Brazil’s state controlled oil company, in order to explore and produce in ten offshore and two onshore blocks. The entire transaction which includes oil fields in the gulf of Mexico and Azerbaijan as well as Canadian sand fields, nets Devon an approximately US$7.5 billion. Devon decided in November to sell its offshore and international oil and gas assets to focus on its less expensive businesses in the United States and Canada.
As the world’s petroleum supplies become more difficult and more expensive to access, major oil companies are building their oil and gas holdings by taking over smaller companies. As expert analyst Pavel Molchanov states “it makes sense for BP to buy Devon’s Brazil operations instead of starting its own deep-water projects there. It’s very difficult for a western company that’s not already in Brazil to enter places like the Campos Basin where Devon is already present. Brazil’s government wants to make sure they maintain control.”
Commenting on the purchase of assets, BP group chief executive Tony Hayward told USA Today, “This strategic opportunity fits well with BP’s operating strengths and key interests around the world, offering us significant additional long-term growth potential with an emphasis on high-margin oil. As well as giving us a broad portfolio of assets in the exciting Brazilian deepwater, it will strengthen our position in the Gulf of Mexico, enhance our interests in Azerbaijan and enable us to progress the development of Canadian assets.”
For the Brazilian government and Petrobras the change of ownership of these blocks can be extremely beneficial, Devon Energy is a medium sized independent energy company which lacks sufficient cash flow to withstand years of investment in technology and exploration without receiving an income.
BP on the contrary has more than sufficient resources to invest large sums of capital and develop these oil blocks in a timely fashion. This will only help Rio de Janeiro-based Petrobras whom will spend $174.4 billion in the in the next three years as it prepares to tap the offshore fields.