Europe’s largest oil company Royal Dutch Shell, is hoping to quadruple oil and gas output in Brazil by the end of 2020.
Following Shell’s $52 billion takeover of BG Group Plc in January, the Anglo-Dutch company has announced its focus on expanding operations in liquefied natural gas (LNG) and deep-water oil production in Brazil’s offshore.
Since adding BG’s large Brazilian offshore assets, Shell’s local output rose sixfold to around 240,000 barrels of oil and natural gas equivalent a day (boepd), or 13 percent of its total of 1.8 million boepd.
These figures are expected to quadruple its Brazilian output by the end of the decade, boosting production to nearly 1 million boepd.
Shell is already Brazil’s no.2 producer after state-led Petrobras and the world’s largest trader of LNG.
While it sells LNG to Petrobras for the Brazilian market, Van Beurden and his Brazilian deputy, Andre Araujo, declined to say if they want to buy Petrobras’ natural gas assets, some of which are for sale.
Brazil’s importance to Shell is expected to increase as it moves ahead with giant subsalt projects such as Libra, which it is developing with Petrobras, France’s Total SA, China’s CNOOC, and CNPC.
Subsalt refers to large hydrocarbon resources trapped deep beneath the seabed by a layer of mineral salts. Libra may hold as much as 12 billion barrels of recoverable oil, according to Brazil’s government.
Shell faces serious challenges in Brazil. Oil prices have plunged since the BG deal was announced a year ago. Petrobras, Shell’s principal partner in the country, is in serious financial and legal difficulty after the price drop and a massive price-fixing, bribery and kickback scandal.
Van Beurden, though, said subsalt areas should be able to break even at oil prices forecast for this year, without saying what those prices might be.