Brazil Field Puts Shell in a Good Spot

[Blue_Tires]

Royal Dutch Shell PLC is the latest in a small group of Western energy companies pumping crude out of Brazil amid intensifying international interest in the country's deepwater oil reserves.

The official launch of Shell's BC-10 oil field Tuesday, off Brazil's southeast coast, comes as the country prepares to approve long-awaited laws on how to regulate its subsalt reserves, a vast resource that has emerged as a kind of El Dorado for the global energy industry.

Brazil has been seen as one of the most promising new oil sources ever since the massive Tupi field was discovered under a thick layer of salt in the offshore Santos Basin two years ago. More finds have followed, and it is thought the area could contain tens of billions of barrels of oil.

Marvin Odum, director of Upstream Americas at Shell, said he believes BC-10, which is not in the subsalt, should open up more opportunities in Brazil. "I think the government will be pleased with what we're doing there," Mr. Odum said in an interview. But observers said it is unlikely Shell will be able to expand its presence in the subsalt beyond the three exploration licenses it already holds.

Several other Western oil companies had licenses for the subsalt area before Tupi was found, but Brazil said it won't grant more licenses until it has established new laws regulating the area.

The laws are expected to reinforce the role of the national oil company Petroleo Brasileiro SA, or Petrobras, in opening up areas like the Santos Basin. They are also likely to channel Brazil's bonanza from the new fields into a new state fund aimed at lifting millions of Brazilians out of poverty.

http://online.wsj.com/article/SB125116362757655657.html

[Judi Lynn]

1. Interesting information. This will be an area to watch carefully. Thanks. n/t