The oil and gas industry has had a notoriously challenging time of late, with the prices of oil plummeting and causing many firms to tighten their belts. However, offshore exploration is providing a much-needed bright spot for the sector, with an increasing number of governments becoming more accommodating.
In the past week, it has been revealed that there are big changes afoot for Brazil’s petroleum laws. Shell has already begun to move on this opportunity with the announcement that it will be going ahead with an 8 billion barrel Libra pre-salt field development in the country. The shift towards a 100 per cent foreign ownership stake is having wider effects too. For example, Petrobras Chief Executive Pedro Parente revealed that he has already begun receiving correspondence from international firms looking for opportunities opened up by the legal change.
However, it’s not only governments that are actively letting go of their assets, but also some of the major exploration and production (E&P) firms. For example, it has been reported that Chevron is looking to make $2 billion from the sale of its Bangladeshi assets. The fields mainly consist of natural gas and are extremely strategic as they’re close to Southeast Asia, one of the globe’s best natgas markets. The oil and gas sector could see some interesting changes based on the eventual buyer of these fields, particularly as many firms seem to be increasing the speed at which they acquire offshore assets.
One firm doing this is BHP Billiton, which, as reported by the Australian Financial Review, is expected to be making a large step into offshore developments, primarily focused on the deepwater around Mexico. It’s said that around 50 professionals are currently investigating the geology of the area for BHP to determine whether to go ahead with bids in new and upcoming licensing rounds. If such a bid makes sense, it would move BHP into brand-new territory.
One reason for the increased interest in offshore is the change in cost structure. BHP noted that the economies surrounding deepwater discoveries are positive at the moment, with service costs and drilling expenses dropping. This means that oil prices in the firm’s Mad Dog 2 field, for example, can be priced under $50 per barrel.
Overall, the oil and gas sector remains turbulent as companies find new ways to do business and make operations profitable. However, offshore developments are certainly finding interest, and could be a bright spark for the sector’s future.
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