A decision by Petrobras (NYSE: PBR) not to invest in drilling new wells has derailed Chevron Corp.’s (NYSE: CVX) plan to resume exploration in a Brazilian offshore field, people familiar with the matter said on Oct. 30.
Chevron, which operates the field with a 52% stake, approved the drilling plan but Petrobras, which holds a 30% stake nixed the move, according to two people close to the talks.
Brazil’s state-controlled oil company, officially known as Petroleo Brasileiro, is prioritizing development of pre-salt offshore resources where billions of barrels of oil lie under a thick layer of salt below the ocean floor, the two people said. The Frade field is post salt and has less oil than pre-salt fields.
Petrobras and Schlumberger NV (NYSE: SLB), which planned to drill six wells for some $20 million, could not immediately be reached for comment. Chevron declined to comment.
Brazilian energy company Petro Rio SA said on Oct. 29 it bought the remaining 12% from Frade Japao. Petro Rio SA CEO Nelson Queiroz told Reuters in an interview on Oct. 30 the company would be interested in buying Petrobras’ stake.
“We see extending the life of the field as a positive, drilling new wells,” he said.
Chevron and Petrobras halted exploration in the Frade field after a 2011 spill that led to criminal charges and a civil lawsuit.
Petrobras, one of the world’s most indebted oil companies, has slashed outlays and focused its shrunken capex budget on developing stakes in the world class pre-salt play in Latin America’s top producer. Other oil majors are also spending top dollar to lock in stakes to the area to replenish shrunken reserves amid rising oil prices.