22 C
Georgetown
Thursday, February 25, 2021

Brazil moving to implement reforms to lure investors as competition from countries like Guyana rise – S&P Global Platts

Must Read

Fifty-seven days later: Bulletwood-1 drill campaign wrapping up

The Stena Carron drillship is wrapping up operations at the Bulletwood-1 prospect offshore Guyana on the Canje Block where...

Saipem gets award for tool that can estimate CO2 in its offshore projects

Italian multinational oilfield services company Saipem has won the Environmental Sustainability Award in International Marine Contractors Association’s (IMCA) 2020 Awards programme,...

Stena DrillMAX to target Turbot/Longtail appraisal operation, new campaign at Whiptail-1

The 6th Generation Harsh Environment dual activity dynamically positioned (DP3) drillship, Stena DrillMAX, is now in Guyana waters and...
OilNOW
OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

Mature oil producer Brazil is looking to implement important oil industry reforms in 2021 to remain one of the world’s top destinations for investments amid heated global competition and uncertainties about the coronavirus pandemic.

S&P Global Platts said in a report published on Thursday that a period of massive change in Brazil’s energy sector is imminent and will see state-led oil company Petrobras largely end its monopolies in natural gas and refining. The company is also shedding more than 100 legacy onshore and offshore fields, creating a dynamic market for small- and medium-sized players focused on revitalizing mature areas.

Brazil’s oil production has been rising for decades, from 1.2 million b/d in 2000 to 3 million b/d in 2020, according to Platts Analytics, which is currently forecasting production to rise another 1 million b/d by 2040.

New Regulatory Framework

According to the S&P Global Platts report, Brazil is also in the process of hammering out a new regulatory framework for the natural gas industry and congress is expected to debate potential changes to the production sharing regime during the next session. This which would potentially allow the National Policy Energy Council, or CNPE, to determine whether exploration and production blocks would be sold under the production sharing or concession models.

Decio Oddone, CEO at independent producer Enauta, said more favorable financial terms isn’t the only thing needed to attract investments, pointing out that regulatory stability is also important.

“Regulatory stability is important, continuous improvement in the regulatory process is important,” Oddone is quoted by S&P Global Platts as saying. “But what’s most important is to not miss the opportunity to do the right thing.”

Oddone was a driving force behind many of the most recent reforms while serving as Director General at Brazil’s National Petroleum Agency, or ANP, from December 2016 until he exited in March. The executive has long blamed a five-year delay in licensing sales while Brazil implemented its subsalt production sharing regime for undercutting the country’s ability to fully develop its resources before a transition to a low-carbon environment.

The current scenario requires flexibility because Brazil now faces competition for oil investments from countries around the globe, including neighbors such as Guyana and Uruguay, officials said.

“The two countries both plan licensing sales in 2021, with Guyana drawing intense interest after ExxonMobil made 18 discoveries in the Stabroek block,” S&P Global Platts is quoted as saying in the report.

Guyana’s competitive edge

Meanwhile, a number of analysts have highlighted the advantages of competitive fiscal terms in the Guyana offshore basin which in a low oil price environment, such as what the world is expected to be faced with in the foreseeable future, ensures Guyana remains a viable choice for investors.

Dr. Pedro H. van Meurs, one of the world’s leading experts on upstream petroleum fiscal policy said this month Guyana’s fiscal terms “are just about perfect” right now because they encourage strong developments under low oil prices.

“For the moment, if we believe the low oil prices are here to stay, the system of Guyana is actually perfect for the conditions,” he said in a virtual presentation at the Guyana Oil and Gas Summit.

Lisa Viscidi, Director of the Inter-American Dialogue’s Energy, Climate Change and Extractive Industries program said in a podcast that the low breakeven cost to develop oil fields in Guyana could see other players losing market share to the new South American oil producer.

Guyana’s Vice President, Bharrat Jagdeo has said while the government will be changing the terms in future agreements to increase the country’s revenue take, the administration recognises that the window of opportunities for oil investments is closing.

“We have this window to get as much out of this sector as possible, maximise production, get the revenue out of the sector; invest it well to build up the capability of this country…” Mr. Jagdeo has said.

Latest News

Fifty-seven days later: Bulletwood-1 drill campaign wrapping up

The Stena Carron drillship is wrapping up operations at the Bulletwood-1 prospect offshore Guyana on the Canje Block where...

Stena DrillMAX to target Turbot/Longtail appraisal operation, new campaign at Whiptail-1

The 6th Generation Harsh Environment dual activity dynamically positioned (DP3) drillship, Stena DrillMAX, is now in Guyana waters and will begin operations with a...

Exxon’s reserves hit lowest point since merger with Mobil in 1999

(Reuters) - Exxon Mobil Corp’s global oil and gas reserves tumbled by a third last year as the COVID-19 pandemic slammed global oil prices...

Saipem gets award for tool that can estimate CO2 in its offshore projects

Italian multinational oilfield services company Saipem has won the Environmental Sustainability Award in International Marine Contractors Association’s (IMCA) 2020 Awards programme, for an innovative CO2 estimation...

Government working with Exxon to ensure early solution to gas compressor issue – Bharrat

The Guyana government is working with ExxonMobil to ensure that the faulty third stage gas compressor now under repairs in Germany, is fixed as...

More Articles Like This