By Brazil Stock Guide – Brazil’s Pelotas Basin may contain 17.9 billion barrels of oil equivalent in undiscovered oil and natural gas resources, according to a preliminary assessment by state-owned energy research agency EPE.
The estimate is part of EPE’s project to assess Brazil’s sedimentary basins, launched by its oil, natural gas and biofuels research division in 2022. The study was released on Sept. 29.
EPE reviewed data from nine exploration wells previously drilled in the basin’s offshore area and interpreted 4,541 lines of 2D seismic data under the supervision of R&F Advisory. The analysis identified 80 geological “leads” in areas both inside and outside blocks currently under concession.
The findings could add to investor attention on an offshore frontier where Petrobras (B3: PETR3, PETR4; NYSE: PBR, PBRA), Chevron (NYSE: CVX), Shell (NYSE: SHEL), Galp (Euronext Lisbon: GALP) and China’s CNOOC hold exposure through exploration acreage or partnerships. Petrobras’ US and Brazilian tickers, as well as Chevron, Shell and Galp’s listings, are confirmed by company investor information.
Natural gas dominates identified leads
Natural gas accounts for most of the geological indications mapped by EPE. Of the 80 leads, 64, or 80%, are gas-related and represent about 1 billion cubic meters of recoverable natural gas, according to the study.
A lead is not a confirmed oil or gas discovery. It represents a geological indication that can help define the location of a potential exploration prospect and requires additional seismic data or information from related wells before drilling decisions can be made.
EPE also cautioned that the estimate carries a high degree of uncertainty. No exploration well has been drilled in the Pelotas Basin since 2001, meaning the figures should be interpreted as an indication of the potential scale of the basin’s resources rather than confirmed reserves.
The estimates may be revised as companies acquire new seismic information, drill additional wells and generate more geological data.
Petrobras and Chevron control 47 exploration blocks
The Pelotas Basin currently has 47 exploration blocks under concession, with Petrobras operating 32 and Chevron controlling another 15.
Petrobras operates 26 blocks in partnership with Shell, three with Portugal’s Galp and another three alongside Shell and CNOOC. Chevron operates its 15 blocks on a standalone basis.
Petrobras shares trade on Brazil’s B3 under PETR3 and PETR4, while its US depositary receipts trade on the New York Stock Exchange under PBR and PBRA. Chevron trades on the NYSE under CVX, while Shell’s US-listed depositary shares use SHEL. Galp trades in Lisbon under GALP.
Geological similarities with Namibia
The Pelotas Basin forms part of Brazil’s South Atlantic Margin. It extends along the entire coast of Rio Grande do Sul and part of Santa Catarina, reaching the maritime border with Uruguay.
Its geology has been compared with Namibia’s Orange Basin on the opposite side of the South Atlantic. The African basin holds an estimated 18 billion barrels of oil equivalent of oil and gas in place, according to Rystad Energy data cited in the EPE study.
Recent exploration in the Orange Basin has resulted in 14 discoveries. First oil from the Venus field is estimated for 2030, according to the original report.
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