Tuesday 25 October 2016

International majors Shell and Statoil on Monday lauded the Brazilian government's shift in tone toward greater competitiveness in Brazil's oil industry, but cautioned the country would need to make good on overtures to open up pre-salt operatorship and address sticking points such as local content to fully develop its resources.

Shell Upstream director Andy Brown highlighted his company's bright view of Brazil's potential, reflected in the roughly $30 billion purchase of the pre-salt portfolio of BG Group earlier this year.

"It's important we have a fiscal environment, and a regulatory environment, that stimulates investment, whether it be local content or opening up the pre-salt to oil companies," Brown told a plenary session at Rio Oil & Gas. "There are important moves that should be taken in order to stimulate investment in a very competitive world."

Brown also praised Petrobras' progress in cost-cutting during the downturn, with reductions in operating costs and capital spending, but said Shell is keen to work together with its partner on continued improvements.

Statoil, which recently ramped up its Brazilian presence with its $2 billion farm-in to the potentially massive Carcara find, struck a similar tone.

"A superior resource base is a necessary but insufficient condition to compete and attract investments in today's oil and gas environment," Paal Eitrheim, president of Statoil Brazil, told the panel. "Without adjustments to the framework – that hopefully are on the way – the downturn could be extended and the recovery delayed."

He echoed calls for reform on local content and competitiveness, also calling for reducing leasing uncertainty and developing an attractive natural gas framework.

"Statoil is already heavily invested in Brazil and we want to do even more," Eitrheim added. "We want Brazil to succeed, and we need Brazil to succeed."