Statoil Asa (NYSE:STO)
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5 Years : From Apr 2012 to Apr 2017
Norwegian oil and natural gas giant Statoil ASA (STO) expects its Peregrino offshore oil field to reach plateau production of about 100,000 barrels a day by mid-August as two new wells start output in the coming weeks, the president of the company's Brazilian operations said Monday.
Statoil suffered delays at Peregrino, the company's largest offshore operation outside Norway, because of equipment troubles that affected completion of three wells, Statoil's Kjetil Hove told Dow Jones Newswires in an interview. Peregrino currently produces about 75,000 barrels of heavy crude per day, Mr. Hove said.
"We are very close now to reaching plateau," Mr. Hove said, pegging the likely time frame at three-to-four weeks.
The Peregrino field and a series of recent offshore oil discoveries made by Statoil and its partners in Brazil are a key part of the company's growth strategy, which aims to increase world-wide company production to 2.5 million barrels a day by 2020 from slightly less than 2 million currently. "A lot of the growth has to come internationally," Mr. Hove said.
Statoil holds stakes in seven offshore exploration blocks in Brazil, including acreage in Brazil's much-ballyhooed pre-salt region, and is in the middle of a five-year plan to invest between $5 billion and $10 billion in Latin America's largest country. The company operates the Peregrino field with a 60% stake after selling a 40% stake to China's state-run Sinochem for $3.1 billion.
Statoil aims to build on previous exploration efforts, which include eight oil discoveries in 12 wells over the past three years, with plans to drill between five and seven new wells over the next 24 months, Mr. Hove said. Drilling on two wells, appraisal wells in the Espirito Santo Basin's BM-ES-32 block and at the Peregrino South prospect in the Campos Basin's BM-C-47 block, are expected to start "in a few weeks," Mr. Hove added.
Statoil, Brazil's state-run Petrobras (PBR, PETR4.BR) and Repsol Sinopec, a 60%-40% joint venture between Spanish oil company Repsol YPF SA (REPYY, REP.MC) and China Petroleum & Chemical Corp. (SNP, 0386.HK, 600028.SH), are also evaluating the appraisal plan for the BM-C-33 block in the Campos Basin.
The companies are discussing "how many wells we want to drill in the appraisal phase," Mr. Hove said, adding that Repsol Sinopec would deliver the appraisal plan to local regulators by August.
Earlier this year, the three companies said the block held estimated recoverable reserves of 1.24 billion barrels of oil equivalent, or BOE, buried below a layer of salt deep under water. Repsol Sinopec operates the block with a 35% stake, while Statoil has 35% and Petrobras 30%. The block holds the Seat, Gavea and Pao de Acucar discoveries.
While Mr. Hove said Statoil is "excited" about its Brazilian offshore holdings, the company is also eyeing other ways to expand its presence such as expected bid rounds or possible acquisitions.
"Our general strategy in Brazil is to grow, and we're looking into all opportunities," Mr. Hove said, declining to comment on specific targets. Earlier this year, press reports linked Statoil, France's Total (TOT) and Denmark's Maersk Oil as possible frontrunners to buy offshore Brazil assets held by Anadarko Petroleum (APC).
Statoil, however, is "prepared" to participate in Brazil's delayed 11th round auction of exploration and production blocks, as well as possible auctions of pre-salt fields under new production-sharing agreements, Mr. Hove said.
"I think that's what we are all waiting for, the next bidding round," Mr. Hove said. "We are prepared for the 11th bidding round and also the pre-salt round that we hope is to come."
Mr. Hove expressed some hope that the 11th round could still be held in 2012, but he said the first pre-salt auction is unlikely before 2013. Brazil's National Petroleum Agency, or ANP, had initially planned to hold the 11th bid round last year, but President Dilma Rousseff has not approved the auction while lawmakers continue to haggle over how to distribute oil royalties.
Write to Jeff Fick at email@example.com