Petrobras abandons deepwater prospect in Brazil’s top region

JUAN PABLO SPINETTO and YASMINE BATISTA

RIO DE JANEIRO (Bloomberg) -- Brazil’s state-controlled oil company Petroleo Brasileiro abandoned exploration at the Caramba prospect in a deepwater region that holds the country’s biggest discoveries.

Petrobras has returned the BM-S-21 concession, where Caramba is located, to Brazil’s National Petroleum Agency, the Rio de Janeiro-based producer said in an email Wednesday. The company operated the concession in the so-called pre-salt region with an 80% stake. Galp Energia SGPS was its partner with a 20% stake.

The decision to return the area underscores how exploration in the deepwater region where Petrobras has had its most success finding and producing oil still carries risks. Output at pre- salt fields, which are deposits trapped below a layer of salt in the Atlantic seabed, has surged to more than 800,000 bopd, about a third of Brazil’s total output, since extraction started in 2010.

Petrobras returned the concession on April 29 after finishing evaluations, the company said in the email, without disclosing the reasons for the decision.

Realistic Plan

The producer has reduced investments for this year following a rout in oil prices. It is expected to unveil a “realistic” five-year business plan as early as June that still includes enough spending to continue increasing production levels, Mines and Energy Minister Eduardo Braga said at an event in Rio on Wednesday.

Relinquishing prospects such as Caramba show the dangers of exploring for oil in Brazil’s deepwaters, said Joao Carlos de Luca, chairman of Barra Energia Petroleo & Gas Ltda., a Petrobras pre-salt partner.

“The pre-salt is not riskless,” De Luca said at a conference in Rio on Wednesday. “We need to relax the pre-salt unique operator rule to make the industry more dynamic. It’s important to drill more in the pre-salt to analyze and know what we have there and not.”