Shell Plans to Continue to Invest Heavily in Brazil
November 10 2016 - 2:30PM
Dow Jones News
RIO DE JANEIRO—Oil major Shell is planning to continue investing
heavily in Brazil as part of a bid to double its global deep water
production by the early 2020s.
Shell plans to invest $10 billion in the South American nation
over the next five years, Wael Sawan, the company's executive vice
president for deep water, said in an interview this week. That
would come on top of the more than $30 billion in capital the
company says it has deployed in Brazil, where it operates 5,500
energy stations and acquired a large number of oil-and-gas assets
earlier this year via its takeover of BG Group PLC.
"We are by far the largest foreign investor," Mr. Sawan said.
"Every single year we will be investing around $2 billion."
Foreign oil firms have been eyeing Brazil with renewed interest
in recent months since the impeachment of President Dilma Rousseff
opened the door for an administration widely seen as more friendly
to investors. The new president, Michel Temer, is pushing
legislation aimed at encouraging investment in the oil sector as
part of broader effort to dig Brazil out of its worst recession in
at least a century.
Shell held a series of investor presentations in Brazil this
week. Chief Executive Ben van Beurden met with Mr. Temer in Brasí
lia on Thursday.
"We continue to be encouraged by what we hear, at the government
level, at the ministerial level, what we read in the press, what we
have in our meetings with government officials," Mr. Sawan said.
"The fundamental view that foreign investment is good for the
country, and specifically in the oil and gas sector…gives us
confidence that we are welcome here."
Shell's roughly $50 billion acquisition of BG was driven in
large part by its assets off the Brazilian coast. Mr. Sawan said
these and other assets in Brazil should produce 400,000 barrels of
oil per day in coming years, accounting for much of the 900,000
barrels per day of oil that Shell aims to produce in deep water
starting around 2020.
Deep water output last year amounted to 450,000 barrels.
Company executives say Shell's 103-year presence in Brazil makes
them comfortable with the country's often-challenging investment
environment.
Shell was one of only a few foreign oil firms that bid on a
massive offshore oil deposit named Libra that Brazil auctioned off
in 2013, snapping up a 20% stake. That auction attracted relatively
little interest from private companies because of rules obliging
Brazilian state-run oil firm Petró leo Brasileiro SA to operate the
oil field.
Brazil's Congress voted in October to ease restrictions on
foreign investment on such oil fields, known as the pre-salt.
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
November 10, 2016 14:15 ET (19:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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