The international oil companies ExxonMobil and Shell Plc. face what a May 16 Bloomberg report describes as “expensive offshore exploration setbacks” to their plans to turn Brazil into a major oil & gas profit centre.
Cumulatively, the two companies have reportedly recently sunk a total of US$3.6 billion into exploration wells offshore Brazil, but have, in each instance, come up with “non-commercial” wells. In the instance of Shell, a Bloomberg report says that over the past three years the company has drilled three exploration wells without finding any commercial volumes, the acquisition of the rights to the three blocks where the drilling occurred costing the company US$1 billion. In the instance of ExxonMobil, the three wells which the company has drilled in Brazil’s waters since late 2020 are also non-commercial, Bloomberg says.
The report points out that apart from the recent disappointing pursuits of Shell and ExxonMobil, Brazil has sold more than US$10 billion worth of exploration acreage to Petroleo Brasileiro SA, the country’s most dominant explorer but that the sales, up until now, have little to show in terms of returns.
Bloomberg reports that “the last knock-out oil discovery in Brazil” was made by Petrobras more than a decade ago and that “the underwhelming results since then could indicate the biggest fields in the country’s so-called pre-salt region have already been found.”
Shell would appear to have fared no better in its recent pursuit of lucrative oil fields offshore Brazil with Bloomberg reporting that the company has suffered a string of failures similar to Exxon, and that “all the blocks acquired by Shell were unsuccessful” so far.
The Bloomberg report concludes that “for Brazil, it means that although oil production will double this decade from the fields it’s currently developing, output will then decline in the 2030s unless new reservoirs are identified for future exploitation.”
Back in March this year, ExxonMobil’s partner, Murphy Oil, reported that the company was pursuing drilling in a new area offshore of Brazil that could have as much as 1 billion barrels of oil and gas.
