There is a strong possibility that Brazil’s state-owned oil company, Petrobras, could expand its operations into neighbouring Guyana.
That’s the word from the company’s Chief Executive Officer, Roberto Castello Branco, making his first official admission of interest in the hot frontier oil play between Brazil and Guyana, which has become the latest oil producing country in the globe.
Castello Branco argued that if the regulatory environment does not improve in Brazil then the oil company will look to expand its operations into Guyana. Petrobras currently has exploration interests off Brazil’s northern coast but there has been wide speculation among geologists that parts of that area could share similar geology with Guyana.
Guyana’s oil production is quickly expanding after a series of blockbuster offshore finds earlier this year, which has apparently perked the interest of the Brazilian state oil company. Petrobras executives have been asked in the past if they would be interested in going into Guyana but they have consistently reported that they prefer to focus on oil exploration and production in Brazil.
Government regulations are stifling
However, during the biennial Rio Oil & Gas conference last week, Castello Branco pointed to what he described as the onerous environmental licensing requirements in Brazil. This, he declared, is pushing the company to consider Guyana.
According to Castello Branco, “We have (in northern Brazil) the potential for a great oil basin and we’re barred. At the same time, Guyana is taking advantage of the situation…(Guyana) attracts us. For now, we’re continuing to invest in Brazil, but it’s possible we go over there as well, preferring that to generating value, generating jobs in a very poor region of Brazil.”
Exploration in northern Brazil has generated significant controversy and regulatory pressure in part because of the presence of an extensive coral reef off the coast of Brazil and neighboring French Guiana.
Regulations cause Total’s exit from Brazil
Owing to the regulatory regime, French-based oil company Total in September exited a cluster of five exploration blocks dubbed Foz de Amazonas, and sold its stake to Petrobras, following difficulties with environmental permitting.