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Brazil continues to develop prolific deepwater finds

Staff reports in Rio de Janeiro

January 08, 2014 - Much of 2013 was taken up watching the unraveling of OGX and Eike Batista's empire of interlinked companies, such as shipbuilder OSX. OGX, once the star of Brazil's oil boom, went into bankruptcy protection on October 30.

Could it bounce back? It has at least now begun production at its Tubarao Martelo field. There is understandably a lot of cynicism given the company's previous problems.

But negotiations with debtors continue, and a second well has just been drilled. After three bid rounds in 2013, there is no official word yet if more rounds will be forthcoming next year as hoped, but the signs appear negative.

Brazilian oil fields

Analysis continues below...

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"I think next year will be a year of great reflection at the ANP, of studies," Magda Chambriard, head of Brazilian regulator ANP said in November.

State-led Petrobras has three new production systems to come online to follow the seven that entered production by the end of 2013.

With 2013's oil output unlikely to vary more or less than 2% on the 2 million b/d seen in 2011 and 2012, the company promises that production will slowly start to rise. Analysts believe it probably will -- perhaps more slowly than the company targets.

Another issue ahead is what Petrobras will do with the 49 onshore blocks it gobbled up in the 12th bid round for onshore gas concessions in November.

Brazil's crude exports

Source: Platts

As always in Brazil, the question revolves around infrastructure. Shale gas took off in the United States with the help of an existing infrastructure of highways, railways and gas pipelines.

Brazil lacks all three -- particularly in far-flung frontier areas like the Sao Francisco Basin -- or even further afield, in Acre, for instance, on the Peruvian Border where Petrobras bought a block in the 12th round, the only company to do so.

Brazil refineries

Source: Platts

Brazil Argentina Mexico
Venezuela Brazil Colombia
Peru Bolivia Paraguay

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