Maersk Oil Turns to Brazil as Core Area in Global Expansion

--Denmark's Maersk Oil in Brazil for long term, says Luis Paulo Costa

--Maersk Oil Brasil seeks to build portfolio via bid rounds, acquisitions

--Company could drill three more wells by year-end, expects to drill more than four in 2013

 
   By Jeff Fick 
 

RIO DE JANEIRO--The Brazilian unit of Denmark's Maersk Oil plans to make one of the world's hottest new oil frontiers a core part of its expanding global footprint, looking at expected offshore concession auctions and potential acquisitions as a way to expand the company's portfolio.

"We are in Brazil for the long term," Luis Paulo Costa, managing director of Maersk Oil Brasil, said in an interview Monday.

Some of the world's largest oil discoveries in the past three decades have been made in Brazil in recent years, and Maersk is eagerly awaiting details of a much-delayed, 11th-round auction of oil and natural-gas concessions. "We're very much interested in seeing what's going to be offered for bid round 11," Mr. Costa said.

Brazil's National Petroleum Agency, or ANP, had planned to hold the bid round last year, but lawmakers continue to haggle over how to distribute royalties from the newfound oil wealth. The lack of new acreage up for bid "limits opportunities for oil and gas companies," Mr. Costa said.

The dearth of fresh acreage has led to intense interest whenever any offshore assets become available, a market Maersk is also watching carefully. "Brazil has a unique combination of prized resources and stable government that attracts companies and makes the environment very competitive," Mr. Costa said.

Mr. Costa declined to give any specifics about potential targets, but made clear acquisitions are "part of us growing in Brazil."

The opportunity to buy into offshore concessions exists as companies try to take advantage of interest in Brazil, driven in large part by a series of ultra-deepwater discoveries known as the presalt.

Anadarko Petroleum Corp. (APC) reportedly has put its offshore Brazil portfolio up for sale. Brazilian mining company Vale SA (VALE, VALE3.BR, VALE5.BR, VALE5.FR) has said it was considering selling some exploration assets as it focuses on core mining operations, while state-run energy company Petroleo Brasileiro (PBR, PETR3.BR, PETR4.BR) could also sell some concessions as the demands for developing the presalt increase.

Maersk is Anadarko's partner in two blocks that hold presalt prospects, including a 20% stake in the Wahoo field and a 27% stake in the Itaipu field. Drilling and analysis at the fields is ongoing, but Mr. Costa said "we've got two discoveries that we're excited about, that we're working on and that we hope to bring to first oil."

The company's Brazilian portfolio also includes stakes in three other offshore blocks also in the prolific Campos Basin, which produces more than 85% of the country's crude oil. The company also receives about 6,000 barrels of oil a day as part of its 40% share of the Polvo offshore field, which BP PLC (BP.LN, BP) operates after having bought the Brazilian assets of Devon Energy Corp. (DVN) for $3.2 billion last year.

For now, Maersk will continue to work its current exploration portfolio, Mr. Costa said. The company has drilled three wells so far in 2012 and may drill another three before the end of the year. While the exploration program for 2013 hasn't yet been defined, Maersk expects to drill "more than four wells" next year, Mr. Costa added.

Write to Jeff Fick at [e-mail]

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