Shell sells participation in block at Santos Basin

06/07/2011

Another business in the Brazilian pre-salt area was announced yesterday. Shell sold for US$ 350 million the 20% shares that it had in the BM-S-8 block of the Santos Basin. That's where the Bem-te-Vi reservoir was found. The buyers were the new company Barra Energia, which acquired 10% of the area - its first asset in the country - and the Brazilian Queiroz Galvão Exploração e Produção (QGEP), which bought the other 10%. Each part was bought for US$ 175 million. In the new configuration of the block, Petrobras continues to operate, with 66%, Galp keeps its 14% and there’s now Barra and Queiróz Galvão with 10% each.

João Carlos de Luca, former president of Repsol Brasil and director of Barra Energia considers it "a privilege" to be in such an important area of the country. "We are proud. Entering the pre-salt in our first business is very beautiful," he said.

The consortium will begin drilling a well in the area that was named Biguá. According to De Luca, the probe is already in place and the drilling should take four months. Then, another well should be drilled. The second exploratory phase of that block ends in late 2012.

Besides Bem-Te-Vi and Biguá, there are another four or six prospects in the block, according to the director. Cesar Cainelli, vice president for exploration of Barra Energia, also explained that the concession area has a great chance to communicate with the field Abaré Oeste, found in the south of the block, but in a surrounding area, more precisely the block BM-S-9 that has Petrobras, Repsol, Sinopec and BG as partners. "An unitization will probably be required. The advantage is that Petrobras is the operator of the two areas", explained Cainelli.

Despite the entry of two new partners, the BM-S-8 is not considered one of the most promising blocks in the pre-salt. In a report released yesterday, Credit Suisse says it does not consider that the acquisition is "very profitable", at least for Queiroz Galvão, which is a company with shares in the stock market, unlike Barra Energia.

In a report to clients, the bank estimates that for this asset to add value will require a very successful drilling in the area, believed not to be as superior as BM-S-11 (where Petrobras has found the giants Lula and Cernambi) or BM-S-9 or the north of the cluster (Franco / Libra). The bank's estimate is that there are 800 million recoverable barrels in the reservoirs ever found.

Cesar Cainelli, from Barra, explained that we are talking about the biggest block, in area, of the pre-salt, and that the records that exist still need to be matured.