(Nov 12): BP Plc is in talks with Petrobras to sell a stake in the Bumerangue oil block off the coast of Brazil, its biggest discovery in 25 years, according to people familiar with the matter.
Negotiations between the two oil firms are ongoing and it’s possible a deal may not materialise, according to the people, who asked not to be identified because the talks are not public.
BP declined to comment on the matter. Petroleo Brasileiro SA, as Brazil’s state-controlled company is formally known, didn’t reply to requests for comment.
Petrobras has expertise in deepwater operations and has also been developing technology to separate CO2-rich gas from oil more efficiently and at a lower cost. That could address Bumerangue’s challenges as early samples from the reservoir, located in Brazil’s Santos basin, showed high levels of carbon dioxide, which could make development complicated.
BP has said the discovery has approximately eight billion barrels of liquids in place. The company will be gathering data from an appraisal drilling campaign in the coming months conducted by Halliburton Co, according to chief executive officer Meg O’Neill. A final investment decision is not expected before 2027, she has said.
“The engineering team is working on two paths,” O’Neill said in late October on an earnings conference call. “One is looking at early production systems and what sort of opportunity might present itself to accelerate revenue from this discovery, as well as then the full field development.”
BP notified Brazilian regulators last month of a hydrocarbon discovery in the adjacent Tupinamba block of the Santos Basin, where BP operates with a 50% working interest alongside Shell Plc. Once BP completes drilling that section of Tupinamba, O’Neill said “we will be able to move over to Bumerangue.”
Focusing on BP’s strongest upstream assets is something shareholders expect from BP’s new top boss O’Neill, the company’s first outsider CEO. The UK oil major seeks to replenish oil reserves and increase production, turning around years of underperformance. Bumerangue is an important piece of the pipeline that offers long-term promise.
Petrobras has increasingly searched for new exploration opportunities, targeting offshore basins in Brazil and overseas areas where it can apply decades of expertise in deepwater drilling and production. The company recently announced oil finds in a controversial exploration area off the coast of the Amazon rainforest.
CEO Magda Chambriard said in September that Petrobras will need to add about nine billion barrels of oil equivalent to its reserves through 2050 to maintain production levels. Output from the prolific pre-salt is expected to peak around the middle of the next decade.
Uploaded by Evelyn Chan