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Eyeing Brazil's black gold mine: Shell wants a slice of the Equatorial Margin, new Pre-Salt, and is already concerned about gas reinjection criteria

Written by Alisson Ficher
Published 14/10/2024 às 12:32

Shell is planning to make a big push into the Equatorial Margin, Brazil’s new oil hotbed. But regulations on gas reinjection and swap agreements between PPSA and private companies could determine the pace of growth. Brazil’s energy future is at stake.

Brazil is preparing to be the stage for a new era in oil sector. A discovery that could change the game and take the country even further to the top of the world ranking of energy producers.

However, amid this promising scenario, some tensions are already emerging between major players and government regulations, raising questions about the future of natural gas exploration.

Shell, one of the giants in the sector, is positioning itself to conquer its space in the Equatorial Margin, Brazil's “new pre-salt”.

Shell has big plans to expand its operations in Brazil, with a focus on auctions in the Equatorial Margin, considered the next frontier for oil exploration in the country.

But these auctions do not yet have a set date.

According to Cristiano Pinto da Costa, president of Shell in Brazil, this occurs because environmental licenses still depend on approval from IBAMA.

The Equatorial Margin is a strategic area for Brazil's energy future, and Shell knows this.

According to Cristiano, this new exploratory frontier will be crucial to maintaining Brazil's leading role in the global oil scene.

Currently, Brazil occupies ninth place among the world's largest oil producers, with the potential to reach fourth or fifth place, thanks to its growth curve in production.

But Shell's strategy goes beyond traditional oil.

The company continues to invest heavily in biofuels, such as ethanol and biomethane, through its partnership with Cosan at Raízen.

This bet is justified by Brazil's competitive advantage in this segment, especially with the growing demand for renewable energy.

Cristiano Pinto da Costa also praised a recent decree that aims to boost the natural gas market in Brazil.

However, he expressed concerns about the regulation of natural gas reinjection., a practice that is already part of the contracts and development plans of companies in the sector.

According to the president of Shell, any change in these rules could generate instability in the market, since many contracts have already been approved by the National Petroleum Agency (ANP).

Furthermore, the Shell executive welcomes the Brazilian government's intention to increase the supply of gas through PPSA (Pré-Sal Petróleo SA), a state-owned company that represents the Union in production sharing contracts.

However, Cristiano highlighted that the oil-for-gas swap contracts that may be established between PPSA and the oil companies must follow market prices., avoiding distortions that could impact the sector’s competitiveness.

The Equatorial Margin, called by some “new pre-salt”, represents a golden opportunity for Brazil to consolidate its position in the global energy market.

However, issues such as reinjection of natural gas and contracts with PPSA may define the pace and economic viability of these new discoveries.

According to energy specialist Adriano Pires, who participated in a conversation with Cristiano Pinto da Costa on the POWER program, Brazil Journal, the success of the Equatorial Margin will depend not only on the appetite of companies to invest, but also on the regulatory conditions and the clarity of the rules imposed by the government.

As Shell plans to strengthen its position in the new oil frontier, the company also keeps its eyes on alternative energy sources.

The joint venture with Cosan, for example, is a clear demonstration that Shell sees Brazil as a solid base for the development of biofuels.

With this, Shell intends to balance its operations, investing in both oil and renewable energy, reflecting a global trend of diversification in the energy sector.

The big question now is: how will Brazil balance these two fronts of exploration?

If, on the one hand, oil from the Equatorial Margin could be the trump card to guarantee the country's relevance in the international market, on the other hand, biofuels could consolidate Brazil's image as one of the leaders in clean energy.

Brazil is about to enter a new era of oil and gas exploration, but the success of this endeavor depends not only on the natural resources available, but also on the ability of the government and companies to work together to create a regulatory environment that favors the growth and sustainability of the sector.

Will Brazil be able to reconcile the interests of giants like Shell with its environmental and sustainable development goals?

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Alisson Ficher

Journalist graduated in 2017 and working in the field since 2015, with six years of experience in print magazines and over 12 thousand online publications. Specialist in politics, jobs, economics, courses, among other topics. If you have any questions, want to report an error or suggest a topic on the topics covered on the site, please contact us by email: alisson.hficher@outlook.com. We do not accept resumes!

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