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Agreements bring together two of the world’s largest oil companies in two areas considered strategic for deepwater exploration. Shell will enter five concessions of the Conifer prospect, while sharing equally with BP the Tupinambá block in the Santos Basin, near the area where the British company announced the Bumerangue discovery.
Shell decided to enter two new exploratory ventures operated by BP, one in the Gulf of Mexico and another offshore Brazil. Under the agreement announced on September 2, 2026, Shell Offshore will acquire 30% of the Conifer prospect, while Shell Brasil Petróleo will hold 50% of the Tupinambá block in the Santos Basin. BP will remain the operator of both assets, retaining a 70% stake in Conifer and 50% in Tupinambá.
The financial details of the transactions were not disclosed. However, the move is significant as it places Shell and BP side by side in two regions where the companies have been strengthening their oil and gas portfolios. Reuters notes that both majors have begun prioritizing long-term upstream growth again, after years of heavy investments in renewables and other lower-carbon businesses.
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In Brazil, the operation gains additional weight due to the location of Tupinambá. The block is in the southern part of the Santos Basin and close to Bumerangue, a discovery that BP previously described as its largest in 25 years and which, according to information released in 2026, contains around 8 billion barrels of liquids.
Shell Enters with 30% in Five Concessions of the Conifer Prospect
In the Gulf of Mexico, Shell will acquire 30% of five concessions that make up the Conifer exploratory prospect, while BP will retain the remaining 70% and continue leading the project. The asset is located in the deepwater Paleogene geological province, one of the areas attracting significant exploratory investments in the region.
Four of the concessions that make up the prospect were obtained by BP in August 2023 during Lease Sale 259. The fifth was added to the portfolio in February 2026, after a new round of concessions. With this agreement, Shell will participate in all five areas that make up Conifer.
The first exploratory well for the prospect is scheduled for 2027. Therefore, the acquisition does not imply that Conifer already has commercially proven reserves or ongoing production; Shell and BP still need to test the geological potential of the area through drilling.
Conifer is About 400 km from New Orleans and Near the Kaskida Project
Additional information from the Oil & Gas Journal locates Conifer in Keathley Canyon, approximately 250 miles, or about 400 kilometers, southwest of New Orleans. The prospect is also near the Kaskida development, another significant deepwater asset of BP.
This proximity could become strategic if a commercial discovery is confirmed. Offshore projects need to combine wells, subsea systems, platforms, pipelines, and logistical routes, and the presence of regional infrastructure can profoundly affect the cost of future development.
For now, however, Conifer remains in the exploratory phase. Thus, the central news is Shell’s entry with a 30% stake, not the confirmation of a new producing field.
Gulf Accounts for Approximately 15% of U.S. Oil Production
The investment occurs in a region that remains essential for the U.S. oil industry. According to Reuters, the Gulf of Mexico accounts for about 15% of the United States’ crude oil production.
Shell already has a particularly strong presence in this basin. Its most recent annual report lists 285 active federal offshore leases operated by the company itself, along with 29 leases in which it participates as a non-operating partner. The company also operates ten major production centers, including Mars, Olympus, Auger, Perdido, Appomattox, Vito, Stones, and Whale.
This presence helps explain why Conifer fits into the company’s strategy. Rather than opening a completely new frontier disconnected from its operations, Shell is increasing its exposure in a basin where it already has decades of experience, teams, infrastructure, and significant production.
Shell Had Just Confirmed New Discovery in the Gulf
The deal comes just months after Shell announced another discovery in the deep waters of the region. In July, the company and INEOS confirmed oil at the Far South prospect, drilled at great depths in the Gulf.
The CPG monitored this development and showed how Shell and INEOS found high-quality oil at the Far South prospect, nearly eight kilometers below the seabed. The discovery enhances the company’s interest in maintaining a continuous portfolio of new exploratory projects in the basin.
Therefore, the entry into Conifer occurs within a broader strategy. Shell is combining mature fields, development projects, and new exploratory opportunities to try to sustain its production over the next decade.
Shell is Also Selling Assets It Considers Less Strategic
The strategy does not simply involve accumulating stakes. In June 2026, the company agreed to sell its 50% interest in the Na Kika platform and associated fields, as well as its full interest in the Coulomb tieback, for US$1.7 billion, subject to adjustments and contingent payments.
At the time, Shell explained that it was reorganizing its portfolio to focus capital on assets capable of sustaining significant production and competitive returns in the long term. Thus, while exiting areas deemed less important by 2030, the company is entering new prospects like Conifer.
This combination of sales and acquisitions helps clarify the financial rationale behind the move. The oil company is not just increasing its offshore presence; it seeks to exchange exposure in mature assets for positions with future growth potential.
Brazil Enters the Same Agreement with 50% of the Tupinambá Block
The second half of the transaction places Shell directly alongside BP in the Tupinambá block, located offshore in the Santos Basin. Shell will acquire 50%, while BP will retain the other 50% and continue as the operator.
BP secured the block in December 2023, during the second round of the Permanent Sharing Offer. Pré-Sal Petróleo will continue managing the production-sharing contract on behalf of the federal government, and Shell’s entry still depends on applicable regulatory approvals.
The first exploratory well at Tupinambá is expected to begin soon, according to information released by BP. Therefore, just like Conifer, the Brazilian block still needs to go through the critical drilling stage before it is possible to determine if a commercial discovery exists.
Tupinambá is Close to Bumerangue, but BP Warns They Are Independent Prospects
The location immediately attracts attention because Tupinambá is close to Bumerangue, where BP made its largest global discovery in 25 years. However, geographic proximity does not necessarily mean that the two blocks contain the same geology or potential.
In a previous interview, BP’s president in Brazil, Andres Guevara de la Vega, stated that Bumerangue and Tupinambá are independent prospects. Thus, it would be incorrect to use the 8 billion barrels associated with Bumerangue as an estimate for Tupinambá.
This caution is particularly important because no recoverable volume has been announced for Tupinambá. Only drilling results and subsequent analyses can indicate whether the area contains hydrocarbons in sufficient quantity and quality to justify development.
Bumerangue Transforms Brazil into a Key Asset for BP
Nonetheless, the neighboring discovery has changed Brazil’s strategic weight for BP. Reuters reports that the company has begun to treat the country as a cornerstone of its upstream portfolio, after attributing approximately 8 billion barrels of liquids to Bumerangue.
When it announced the discovery in 2025, BP indicated that the well was located about 404 kilometers off the coast of Rio de Janeiro, in water depths of 2,372 meters. The company had already classified the result as its largest discovery in roughly 25 years.
Tupinambá now joins a Brazilian portfolio that has become significantly more important within the oil giant’s global strategy. For Shell, on the other hand, the agreement offers access to another exploratory opportunity in a basin that the company knows intimately.
Shell Moves Billions and Long-term Projects in the Santos Basin
Shell’s presence in Brazil’s pre-salt region did not begin with Tupinambá. The company is involved in major producing assets and has various exploratory and development positions along the Brazilian coast.
In February 2026, for example, the company reorganized its stake in the Orca Project, also in the Santos Basin. The CPG showed how Shell sold 20% of the Orca project to KUFPEC, maintained the operation, and preserved 50% of the asset, with production expected by the end of the decade.
This strategy is similar to the moves in Conifer and Tupinambá. Shell shares risk and capital with partners but aims to remain exposed to the assets it considers most competitive and capable of generating long-term production.
Two Competitors Begin to Share Exploratory Risk
Exploration in deep waters requires significant investments before there is any guarantee of production. First, companies acquire rights to blocks, process large volumes of seismic data, and select targets. Then, they hire rigs capable of drilling kilometers below the ocean surface.
A single well can cost tens or hundreds of millions of dollars, depending on location, depth, and complexity. Furthermore, even a discovery must undergo evaluation before a final investment decision is made.
By splitting Tupinambá into 50% for each company and Conifer into 70% for BP and 30% for Shell, the two majors also share part of the financial risks of exploration. At the same time, each company maintains exposure to the potential of a future discovery.
BP Will Continue to Make Operational Decisions on Both Assets
Despite Shell’s entry, BP will continue operating both Conifer and Tupinambá. This means that the company will remain responsible for conducting technical activities, hiring services, and coordinating exploration campaigns within the agreements established among the partners.
For Shell, therefore, the stakes will initially be non-operated. This format is common in the offshore industry as it allows a company to economically participate in a given asset without needing to directly lead every stage of the project.
Shell itself has dozens of non-operated positions in various regions while taking the lead on other ventures. This combination helps major oil companies distribute capital among more opportunities.
Shell and BP Reprioritize Oil and Gas in Growth Strategy
The deal also attracts attention due to its strategic context. Shell and BP have spent years promising to ramp up investments in renewables, electrification, and low-carbon businesses, but both are again emphasizing the importance of oil and gas for cash generation and growth.
Reuters reports that the companies are prioritizing long-term growth in their oil and gas portfolios. This does not mean they have completely abandoned energy transition investments but indicates a shift in the balance among different business areas.
In Shell’s case, the company recently announced its intention to form a more focused, resilient, and return-oriented company. Its second-quarter 2026 results also highlighted capital discipline and portfolio simplification.
Gulf and Brazil Are Two of the Most Important Offshore Regions for Shell
Shell describes the Gulf and Brazil as two of the most important offshore production environments in its portfolio. In the Gulf, the company operates large deepwater platforms; in Brazil, it participates in some of the main pre-salt projects.
This strategy also appears in recent investment decisions. While the company is selling smaller or mature positions, it maintains stakes in larger-scale assets and seeks to add new exploratory opportunities.
In the Gulf, CPG has already shown how Shell expanded production related to the Perdido complex with new wells capable of adding up to 25,000 barrels of oil equivalent per day. Although the expansion occurred prior to the current agreement, it illustrates the strategy of leveraging large offshore hubs to sustain production and incorporate new volumes.
Conifer Is Near Infrastructure That BP Is Already Developing
Another relevant detail is the proximity between Conifer and Kaskida, a project where BP made a final investment decision in 2024. The location could enhance technical options if Conifer is successful, although no development solution has been announced for the prospect.
In the offshore industry, discoveries located near platforms or future production centers can eventually utilize submarine tiebacks. This solution connects wells to an existing or planned facility, avoiding the need to build a completely independent platform.
However, to state that Conifer will be connected to Kaskida would be premature. Before any decision of that nature, BP and Shell need to drill, confirm resources, and analyze the best development architecture.
Conifer’s First Well Is Not Expected Until 2027
The timeline helps to separate expectation from reality. BP expects to drill the first exploratory well at Conifer in 2027, while Tupinambá is slated to receive a well before that, with a start indicated as imminent by the company.
Therefore, the coming months will be crucial for the Brazilian asset. A successful campaign at Tupinambá could add another discovery to the Santos Basin just after the impact caused by Bumerangue.
In the Gulf, Conifer will require more time. Shell is now entering the partnership, but geological results are not expected until the drill reaches the target reservoirs.
No Values Have Been Disclosed by the Companies
Despite the size of the two companies, Shell and BP did not disclose how much Shell will pay for the stakes. Specific investment commitments or amounts related to upcoming wells were also not provided.
This makes it impossible to calculate what each percentage represents financially. There is also no basis to claim that this is a billion-dollar acquisition solely based on the offshore location of the assets.
The economic value can only be better assessed when more information is available on exploratory costs, the results from the wells, and the possible quantity of recoverable hydrocarbons.
Shell’s Entry Does Not Alter BP’s Operational Control
Gordon Birrell, BP’s executive vice president of Upstream, stated that Brazil and the Gulf are important regions for the company and that bringing together two experienced operators could help unlock the potential of the opportunities.
From Shell’s perspective, the assessment is also positive. The company considers the Gulf a world-class basin and continues to seek opportunities to strengthen its position in the region.
Thus, the agreement creates a partnership but not a transfer of command. BP maintains the operation and a larger stake in Conifer, while equally sharing Tupinambá with the new partner.
Brazilian Exploration May Gain a New Chapter After Bumerangue
For Brazil, the main point of focus is what will happen when the Tupinambá well is drilled. Proximity to Bumerangue increases market curiosity, but BP executives have already warned that prospects need to be analyzed individually.
If drilling does not find commercial volumes, Shell’s entry will remain an exploratory investment without further development. However, if a significant discovery is made, the two companies could initiate a new sequence of evaluation, delineation, and economic studies.
It is precisely this uncertainty that characterizes offshore exploration. Before any platform, FPSO, or production, there is a stage where billions of barrels may appear in estimates — or a well may simply not confirm the geological thesis.
Shell Exchanges Asset Stakes While Building a Portfolio for the Next Decade
When different recent announcements are placed side by side, a clear strategy emerges. Shell sold 20% of Orca in the pre-salt, announced the sale of 50% of Na Kika in the Gulf, confirmed oil in Far South, and is now entering Conifer and Tupinambá.
This shows that the company is not simply choosing between “buying” or “selling” oil. It is continuously reorganizing its portfolio, reducing stakes in some assets while using capital to increase exposure in others.
In the case of Conifer and Tupinambá, the bet is clearly on the future. Neither currently produces oil, and both rely on drilling to confirm their potential.
Brazil and the Gulf Unite Shell and BP in Two Simultaneous Bets
The agreement concludes with a simple structure but one that is strategically relevant. In Conifer, BP will hold 70% and Shell 30%. In Tupinambá, each company will have 50%, while BP will continue to operate both assets.
The first response is expected to come from Brazil, where drilling at Tupinambá is anticipated soon. Then, in 2027, Conifer is set to receive its first well in the Gulf of Mexico.
Thus, Shell and BP will share the risks in two of the most important offshore regions in their portfolios. If the drilling confirms commercially relevant hydrocarbons, the stakes acquired now could turn into projects that produce for decades. If not, they will remain part of the inherent risks associated with exploration — the very risks that the two majors have chosen to share.
What do you think? Do you believe Shell and BP are right to re-emphasize significant oil and gas projects in deep waters, or do you think this capital should be more intensely directed toward renewable sources and new energy technologies?
