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Brazil hopes to raise crude output to more than 5 mbpd by 2027.
Brazil hopes to raise crude output to more than 5 mbpd by 2027.

Shell Big Winner of Historic Brazil Oil Blocks Auction

Shell Big Winner of Historic Brazil Oil Blocks Auction

Oil major Royal Dutch Shell Plc won half the blocks awarded in Brazil’s deepwater oil auction on Friday, while rival BP took two blocks and Exxon Mobil Corp one in a historic opening of the pre-salt play to foreign operators.
Brazil awarded six of the eight blocks on offer in the auction for the rights to pump oil from the country’s coveted pre-salt region, where billions of barrels of oil are trapped below thousands of feet of salt in the country’s Atlantic waters, Reuters reported.
President Michel Temer said development of the blocks would lead to 100 billion reais ($30.84 billion) in investment from the winning companies and 130 billion reais in royalties and other revenues for the cash-strapped state.
The wins bolster Shell’s position as the largest foreign operator in Brazil’s offshore oil sector, second only to state-run oil giant Petrobras, adding more than 1,700 square kilometers to its deepwater Brazil portfolio. The Anglo-Dutch oil major won one area in a consortium with France’s Total SA, another with Petrobras and Repsol-Sinopec, and a third with Qatar Petroleum International and China’s CNOOC. Shell has said it is confident it can pump oil from the pre-salt fields at below $40 a barrel. “These winning bids were submitted after our thorough evaluation and add strategic acreage to our ... global deepwater growth options,” Shell Upstream Director Andy Brown said.
Rival BP Plc, which is active in Brazil but not yet producing oil, took two blocks on Friday. US major Exxon Mobil, whose 10-block win in last month’s Brazilian auction was seen by many as a prelude to a big play on Friday, took just one block as part of a consortium with Norway’s Statoil ASA and Petroleos de Portugal SA, a unit of Galp Energia SGPS SA. Two blocks got no bids.
But Exxon bought a stake in a nearby block from Statoil for $1.3 billion, Statoil said, soon after the round.
Brazil has high hopes for the volume of oil the companies can pump from the blocks. Brazilian oil output could double to more than 5 million barrels per day by 2027, compared with the 2.6 million bpd produced in August, regulator ANP has said.

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