Why Statoil is supporting Brazil's gas market liberalization

Thursday, March 29, 2018

Operating in Brazil since 2001, Statoil became the third largest oil and gas producer in the country and is continuously expanding its local portfolio, including solar power generation. The head of the company's Brazilian branch, Anders Opedal (pictured), spoke to BNamericas at Statoil's Rio de Janeiro office and provided an update on its operations in Latin America's largest economy.

BNamericas: Statoil has recently started the drilling campaign in Carcará (BM-S-8). How have works there evolved so far and what are the main expectations?

Opedal: We are now drilling well 104, as part of a requirement from the area's development evaluation plan [PAD] agreed with [local regulator] ANP and we are preparing for the upcoming drill stem test. When we are finished with that, we will move to Guanxuma, which is another prospect within the BM-S-8 license.

BNamericas: What are the expectations regarding this other discovery's potential?

Opedal: We do not expect a new Carcará, that is for sure. But it is a promising upside potential.

BNamericas: How important was it for the company to have acquired the Carcará Norte area?

Opedal: Carcará is a good reservoir and this type of challenge – being an operator in a deepwater offshore requiring high technology – is really fitting Statoil. We saw an opportunity for aligning the ownership interest in the north and south to have a smoother unitization between the north and the south. That way we should be able to move the project faster and produce first oil around 2024.

BNamericas: Statoil is building a strong portfolio in the Santos basin and chances are the company will find large amounts of natural gas in the region. Could this be an opportunity for a company other than Petrobras to implement an independent flowing infrastructure in Brazil?

Opedal: Definitely. We are now looking for different options. Carcará is not a gas field but it has associated gas, which can be re-injected or brought to existing pipelines through infrastructure sharing agreements or there could be other companies coming in and offering new kinds of capacity for transportation of gas. We are also analyzing that for BM-C-33. It will be a key part of the decision when we start developing these fields. So we have established a midstream, gas area in Brazil to take all our knowledge acquired back in Norway to apply it here.

BNamericas: When was this team created?

Opedal: In 2017. They are now exploring all the options and establishing the relationship with potential buyers and providers of pipelines. We belief that there is value in gas and we would like to monetize it whenever possible because gas to shore creates energy, jobs and helps Brazil develop.

BNamericas: This is in line with the Gás para crescer (Gas to grow) government program.

Opedal: We are supporting the liberalization of the gas market in Brazil. Hopefully there will be a bill that will open up the market and make it easier for gas to flow.

BNamericas: BM-C-33 is said to have large volumes of gas.

Opedal: Correct, and that is why we have the possibility to use the Cabiúnas gas terminal, according to the memorandum of understanding signed with Petrobras [earlier this year, as part of Roncador's 25% stake acquisition] but, of course, we will be open for other options as well.

BNamericas: What are Statoil's expectations regarding the next oil and gas bidding rounds in Brazil?

Opedal: We appreciate very much the consistency of the licensing rounds in Brazil, which has allowed us to plan ahead of the tenders. We have been pre-qualified for the 15th round so of course we are going to look into it, but if we are bidding or not, we will have to see. No decisions have been taken so far.

BNamericas: The permanent offer regime is coming into force in the next months. Are there any areas that might be of Statoil's interest?

Opedal: We are constantly evaluating everything that is available but it is not like we are missing something in our portfolio in the country right now, as we have a potential, depending on our exploration success and phasing of projects, to produce around 300,000 to 500,000b/d in 2030. Brazil is a core area for us.

BNamericas: What are the next steps for the Peregrino field?

Opedal: We are building the third wellhead platform at the moment and working on the subsea installations. Commissioning of the platform will start-up in 2020 and by the end of that year we will have started it, opening up a new area that will add 215Mb.

BNamericas: And Roncador?

Opedal: The goal there is to identify subsea, modification projects and drilling campaigns that could increase oil recovery by 5 percentage points, helping us triple our production in Brazil.

BNamericas: What about the BM-C-33 block, what is happening there at the moment?

Opedal: We are looking into different concepts, trying to optimize capex, to understand the reservoir, which is a different kind of pre-salt. So far we see around 1Bboe in this block, considering the Pão de Açúcar, Seat and Gávea discoveries. But we still need to find a way to bring the gas to shore. Again, it is important to see how the 'Gás para crescer' program is evolving.

BNamericas: Statoil also owns exploration blocks in the Espírito Santo basin. What are the plans there?

Opedal: In Espírito Santo we have some assets as operator and others where we are partners of Petrobras, which is drilling an exploration well in the Cachorro Quente prospect. Further development in the area will be based on this and maybe on the next well Petrobras will be drilling. Then we might consider moving the drilling rig that is currently working in Carcará to carry out a campaign in Espírito Santo.

BNamericas: How do you see the possibility of a spot market emerging in Brazil after the approval of tax incentive measures allowing dehired rigs to remain in the country?

Opedal: I think these changes will indeed make a more liquid market and make it easier to conduct drilling campaigns in Brazil. Historically, rigs have been hired under long-term contracts because they were basically chartered by Petrobras, which has a huge portfolio. Now there are more companies coming in as operators and some of us will have a need for a shorter period to perform the exploration drilling, so it is important to be able to close both short- and long-term contracts.

BNamericas: At the end of 2017 Statoil acquired a 40% stake of the Apodi solar plant in Ceará state. Does the company plan to further expand its operations in the renewables sector in the country?

Opedal: We are evaluating that. There are upcoming bidding rounds for solar and we are looking into them. This first project is really about learning about the solar business, which is a new world for us. Then we will see how we can build a bigger portfolio.

BNamericas: What can we expect in terms of investments from Statoil in Brazil this year?

Opedal: We only guide at corporate level, and total capex for 2018 is US$11bn. We will focus investments in Roncador, Peregrino, Pão de Açúcar and Carcará. Investments should be fairly flat from 2016 but it will gradually increase in the coming years.


About Anders Opedal

Anders Opedal has an MBA from Heriot-Watt University and an engineering degree from National Institute of Technology. He joined Statoil in 1997 as a petroleum engineer in the Statfjord operations and has held a variety of roles since then in drilling and well, procurement and projects. In 2010 Opedal was appointed senior vice-president of projects in TPD, responsible for Statoil's project portfolio. Before becoming Brazil's country manager, he was Statoil's executive vice-president and chief operating officer. Prior to joining Statoil, Anders worked for Schlumberger and Baker Hughes.

About the company

Statoil do Brasil, a subsidiary of Norway's Statoil, is engaged in the exploration and production of oil and gas. The branch was founded in 2001 and is based in Rio de Janeiro. After four years in production, its Peregrino field in the Campos basin offshore Brazil passed the 100Mb milestone of oil produced since April 2011. Peregrino, jointly owned by Statoil and China's Sinochem, is the largest field operated by Statoil outside Norway and accounts for about 12% of its international production (total of around 720,000b/d). Recoverable reserves are estimated at 300-600Mb. In January 2015, Statoil submitted the Peregrino phase II development plan to local regulator ANP. With total estimated investment of US$3.5bn, the project involves a new drilling platform and will add about 250Mb in recoverable reserves.