South America Will Become the Next Large Offshore Oil Exploration Area


Posted March 24, 2021 by carbonpipe

South America Will Become the Next Large Offshore Oil Exploration Area

 
The plunge in crude oil prices in 2020 and continued global oil oversupply have hardly slowed the boom in South America's large-scale offshore oil boom. Guyana has a huge oil boom, and Suriname is also at a critical moment of development. Brazil, the region's largest economy, is now the world's tenth largest oil producer. It is the booming offshore oil industry of these countries that will make South America the world's leading offshore oil production area, even surpassing North America. Despite the epidemic and the plunge in oil prices in 2020, Brazil's offshore oil industry has experienced strong growth. The average annual oil and gas production increased by 5% year-on-year. It is Brazil's subsalt oil fields and Petrobras' focus on developing ultra-deep water fields that have contributed to this healthy growth. Pre-salt oil production soared by nearly 18%, reaching 2.6 million barrels per day, accounting for 69% of Brazil's total production. Petrobras announced its best operating performance to date, including record exports, with an average daily oil production of 2.28 million barrels. In January 2021, Petrobras’ exports through its Angra dos Reis terminal reached a new high of 19.3 million barrels.

The attractive economic assets of Brazil's sub-salt oil regions will promote greater investment and production growth. When the average price of Brent crude oil is expected to be 60-70 US dollars per barrel, many assets are mining low-sulfur intermediate crude oil at a profit and loss price of 35 US dollars per barrel or even lower, which makes them obtain high profit.

Petrobras has pledged to invest 55 billion U.S. dollars between 2021 and 2025, of which 84.5% ($46.5 billion) will be used for exploration and production activities. In 2021, the funds for exploration and production will be 8.1 billion U.S. dollars. The company plans to spend 70% of its five-year $46.5 billion exploration and development budget ($32.5 billion) for its subsalt oil fields, of which $13 billion is used in the Campos Basin and $11.7 billion is used in the Buzios oil field in the Santos Basin.Even if a considerable portion of shallow water and non-core assets are sold, the average daily output of Petrobras will still reach 2.3 million barrels by 2025, an increase of 3% over 2020. Due to favorable economic conditions, foreign energy giants are also investing in Brazil's sub-salt oil fields together with Petrobras. Rystad Energy, an industry consulting firm, predicts that in the medium to long term, Brazil's crude oil production will reach an average of 3.5 million barrels per day.

It is not only Brazil's oil industry that has attracted a lot of investment, and it has promoted oil and gas production in the region. Guyana is also experiencing its own oil boom, with an estimated break-even price of between $23 and $35 per barrel, which makes the country a focus of energy investors. Since the beginning of 2015, the global oil giant ExxonMobil has discovered 18 oil sources offshore Guyana, and its recoverable crude oil resources are estimated to exceed 8 billion barrels. Although Exxon drilled two dry wells in the Kaieteur and Stabroek blocks in November 2020 and January 2021 respectively, the company continues to advance its offshore exploration plans in Guyana. The oil giant opened the bullet-wood-1 well in the Canje block last month, which may store more than 500 million barrels of oil equivalent. Canje is bordered by the prolific Stabroek block and the Suriname offshore block 58. Apache and Total have made 4 discoveries here since January 2020, and the operator Kosmos plans to develop an exploratory well in 42 blocks in 2021. Exxon’s Payara development project was approved in 2020, and Liza 2 was launched in the Stabroek block. By 2026, the oil giant’s daily output will reach at least 750,000 barrels.

Suriname’s state-owned oil company and oil and gas regulator statatsolie predicts that by 2025, the country will produce crude oil offshore. According to data from the industry consulting company GlobalData, the Maka Central-1 oil field located in Block 58 offshore Suriname is the first oil field discovered by Apache in the Guyana-Suriname Basin. The oil field has at least 300 million barrels of crude oil reserves. Some analysts and industry insiders speculate that the field may be larger than ExxonMobil’s Liza reservoir in the Stabroek block, which has more than 800 million barrels of crude oil. Apache expects to extract crude oil from Block 58 around 2025.

Although Brazil, Guyana and Suriname are the main offshore drilling jurisdictions in South America, neighboring Colombia also wants to join the competition. Since the end of the 2020 epidemic lockdown, the Andean country has been working hard to start its oil and gas industry. One of Colombia’s initiatives to promote economic growth and key oil and gas reserves is to implement a new framework for the offshore oil industry in 2020. The Ministry of Energy claims to have received $1.6 billion in investment for Colombia's offshore oil and gas projects. This will not only increase the oil and natural gas reserves of this Andean country, but also boost production, especially Bogota’s focus on attracting further investment in the oil industry, which is vital to the economy. Like Guyana, Suriname, and Brazil, the economic prospects of Colombia's offshore oil fields are also attractive. According to estimates by the Institute of Natural Resources Management, the average break-even price is $31.77 per barrel. Coupled with Bogotá's favorable oil industry policy and political stability, Colombia should be able to successfully attract overseas investment from international energy companies.

According to data from consulting company IHS Markit, since 2012, the amount of oil discovered in the coastal waters of Latin America has steadily increased, and the discovery of conventional oil reserves is mainly concentrated in offshore areas. For these reasons, GlobalData stated in a press release issued in November 2020 that by 2024, South American offshore oil production will exceed North American offshore oil production. Rystad predicts that South America will lead the recovery of offshore oil after the epidemic. This is mainly due to the economic advantages of the region. From now to 2025, Brazil and Guyana will receive more than one-third of all offshore oil investment. Therefore, South America's offshore oil and gas production will soar in the next few years and may become the world's leading offshore drilling area.

Posted by Permanent Steel Manufacturing Co.,Ltd(www.permanentsteel.com), the carbon seamless steel pipe and pipe fittings supplier in China
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Last Updated March 24, 2021