Royal Dutch Shell and its partners have bagged production sharing contracts for two pre-salt blocks located in the Santos Basin, offshore Brazil during an auction held by National Agency of Petroleum, Natural Gas and Biofuels (ANP), the Brazilian oil regulator.
The production rights are for 35 years with Shell paying a total of R$332.5m ($100m) as part of its share of the bidding amount.
One of the blocks won by the Shell consortium is the Entorno de Sapinhoá block, which is a unitized area to the Sapinhoá field. Petrobras will be the operator of the block with 45% stake while Shell with 30% and Repsol with 25% will be its partners.
The block is located in the central part of the Santos Basin and is near Shell’s Gato do Mato field where it is the operator with 80% stake. Total is the partner of Shell in the block with a stake of 20% stake.
The second pre-salt block won by Shell alongside its partners is the Alto de Cabo Frio – West block where it will be the operator with 55% stake. It will be joined by Qatar Petroleum which will hold 25% stake and CNOOC with 20% stake.
With the new blocks, Shell has added over 1,700km2 to its deep-water Brazil portfolio.
Shell upstream director Andy Brown said: “These winning bids were submitted after our thorough evaluation and add strategic acreage to our already leading set of global deep-water growth options.
“We will determine our next steps with a focus on continued value to Shell and our shareholders. Our deep-water expertise is well-suited for the opportunities that lie ahead.”
Currently, Shell operates two floating, production, storage and offloading (FPSO) vessels in Brazil. Besides, it is a partner in 10 other FPSOs, operated by Brazilian state-run oil company Petrobras.
Shell had recently revealed its intentions to invest $10bn in its existing offshore developments in Brazil in the early 2020s, in a move to support deep water activities as its growth priority in the upstream category.
Image: Shell added production rights for two offshore pre-salt blocks in the Brazilian auction. Photo: courtesy of Royal Dutch Shell plc.