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Shell to invest $1.6bn in Brazilian oil block

Royal Dutch Shell will invest more than $1.6bn in the second phase exploration of a key Brazilian oil block and also plans to compete in the country’s next auction of oil and gas concessions, senior company figures have disclosed.

An oil rig in Guanabara bay, Rio de Janeiro Photo: Alamy

Robin Yapp

By , in Sao Paulo 7:07PM BST 21 Sep 2011

Already Brazil’s second biggest oil producer after the state-run energy giant Petrobras, Shell has had impressive results in the Campos Basin, part of Brazil’s pre-salt oil fields that lie deep below the Atlantic ocean and a thick layer of salt.

Production in the area has been 30pc higher than anticipated, convincing Shell to make substantial further investment in the hope of seeing similarly impressive results.

Andre Araujo, president of Shell Brazil, said the second phase development of the BC-10 block in the Campos Basin – in which Shell has a 50pc share and is believed to hold 400m barrels of recoverable oil – will start next year.

“To give you an idea of the importance of exploratory activity in Brazil for Shell, we are going to invest, just in the second phase of BC-10, more than the $1.6bn that we spent to set up Raizen [its joint venture Brazilian ethanol plant],” he said.

Marvin Odum, Shell’s director of exploration and production for the Americas, said the company would look to further expand in Brazil because it now appears a more attractive investment prospect than many other oil-producing nations.

“The opportunities that we find here are of the highest quality in global terms, both from the regulatory point of view and geological,” Mr Odum told business newspaper Brasil Economico.

“Because of this, we don’t believe that a recovery of production in countries such as Iraq and Libya, in the future, will reduce Brazil’s attractiveness. The pre-salt has areas of the highest quality.”

Mr Odum indicated that Shell was likely to compete when Brazil’s National Petroleum Agency auctions new exploration blocks off the country’s north-east coast in 2012 but said a final decision would be taken after details of the auction are published.

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