Total Oil reported it will be undertaking more investments in Brazil, terming the country as having a “huge potential” in its oil fields. In the announcement, Total said it will be contending for licenses in the coming bidding round and hopes to expand its Brazilian oil and gas business after a new proposed law on foreign participation makes the move possible.
The Brazilian government is expected to hold a bidding round in 2011 or 2012 for oil fields exploration licenses, with a new law on the way that will allow companies such as Total to take part in the bids. Last week, Total reported it had purchased a 20% stake in BM-S-54 license, owned by Royal Dutch Shell offshore the Santos Basin, south of Rio de Janeiro.
The two companies are expected to commence operations in the basin by end of 2010. Marc Blaizot, Head of geosciences at Total, said the move was an initial step in the French Group’s expansion into Latin America, given the fact that the company has no producing assets in Brazil yet. Currently, Total has expansive drilling operations in West Africa, Northern Europe and the Middle East.
He noted the fact that Total’s entry into Brazil was late but reiterated that the country still has vast areas of interest that are yet to be explored in the Santos and the Campos basin, thus the Total wants to venture into the country with the coming rounds of license bidding. It emerged that Total, in the early 2000s had kept off the Brazilian market as it was not sure that it would find considerable oil reserves below the salt layers on the ocean floor.
However, other oil companies had taken the venture and include companies such as BG group, a British company, Galp from Portugal and Respol from Spain with interest in Brazil’s deepwater subsalt fields. Blaizot reiterated that Total had mistakenly assumed Brazil’s potential reserves levels as doubtable, but it had been shown that they are evidently much better than expected. The Brazilian venture is expected to hold vital growth opportunities for the company, with the country in need of mega investments to tap its offshore fields that require enormous technological expertise for continued production beyond 2020.
The Brazilian legislature passed a plan that creates production sharing mechanism meant to replace the current concession model in future oil projects and bolster the government’s control over huge deepwater reserves off its coastline. Blaizot said Petrobras, the Brazilian state owned oil giant, was very weary of the considerations but is as well keen on international partnerships.
10 July 2010.