Petrobras to sell stake in Brazil Santos Basin subsalt acreage

Rio de Janeiro — Petrobras has put up for sale the BM-S-51 exploration block in Brazil's offshore Santos Basin, a move that will give buyers access to potential subsalt oil and natural gas deposits under the country's more-favorable concession regime, the state-led company said Aug. 10.

'This exploration block is strategically positioned in relation to other Santos Basin discoveries and exploration areas in the production-sharing polygon," Petrobras said in a statement. The company holds an 80% operating stake, with Spanish-Chinese joint venture Repsol Sinopec Brasil retaining the remaining 20%.

Petrobras plans to sell 50%-100% of its stake in the block, according to the company.

The sale expands Petrobras' ongoing divestment program amid uncertainties about the volume of funds the company will raise during the current market turmoil and ongoing coronavirus pandemic, which has brought global oil industry mergers and acquisitions activity to a near-standstill. Petrobras wants to raise $20 billion-$30 billion by end-2024, including the sale of eight of the company's 13 operated refineries as the company ends its downstream monopoly.

The sale also represents just the second potential sale of an offshore asset with subsalt potential in the Santos Basin, where most of the multibillion-barrel subsalt discoveries were made in the late 2000s and early 2010s. Petrobras previously sold the Bacalhau Field to Norway's Equinor for $2.5 billion. Petrobras said at the time that it parted with the massive deposit estimated at holding 700 million-1.3 billion barrels of recoverable crude because of high pressures that would be trickier to overcome than other subsalt deposits, including gas reinjection.

The BM-S-51 block, which was purchased by Petrobras during the country's seventh bid round, held in 2005, is located about 250 km off the coast of Sao Paulo state in 350-1,650 meters of water. The block is adjacent to the Mexilhao gas field and export hub, the Aram subsalt exploration area purchased by Petrobras at Brazil's 2019 production-sharing auction, Equinor's Bacalhau and North Bacalhau fields and the BM-S-50 exploration block holding the Sagitario discovery.

The block is in the first exploration phase, with a firm commitment to drill a single exploration well remaining, Petrobras said.

Potential bidders must be qualified as an A operator by Brazil's National Petroleum Agency, or ANP. The A operator designation allows exploration and production activity in deep and ultra-deep waters. Investors have until Aug. 24 to express interest and obtain documents from Petrobras, with non-disclosure agreements and other documents expected to be submitted by potential bidders until the Sept. 4 deadline, Petrobras said.