Chevron Sees Brazil's Pre-salt Oil as Prize Asset

August 17, 2021

World Energy Reports LLC.

Chevron Corp is hoping to play a role in Brazil's pre-salt oil discoveries, the U.S. oil major's Brazil chief said on Tuesday at the Offshore Technology Conference (OTC) in Houston.

The "pre-salt chapter" might be the most important development in Chevron's more than century-long presence in Brazil, said country manager Mariano Vela. Chevron has held interests in 11 deep water projects in Brazil's Campos and Santos basins since 2018.

"We want a piece of that," Vela said of the pre-salt area, so called because the oil reservoirs lie beneath salt domes under the seabed.

Brazil's government is organizing a December auction for licenses in two blocks in the pre-salt area. Vela did not directly say whether Chevron plans to bid at the auction.

The same blocks—Sepia and Atapu—were offered in a 2019 auction that stalled. Chevron and others at the time said license fees were too high and there was regulatory uncertainty.

Vela said on Tuesday that incentives have improved since then, which included a 70% reduction in the size of signing bonuses. There still needs to be regulation improvements and financial incentives to make new oil projects in the country more attractive, he said. Fossil fuels must now compete with cleaner sources of energy, he added.

"The window (to invest in oil) is not going to remain open forever," Vela said.

(Reporting by Sabrina Valle and Marianna Parraga; Editing by Andrea Ricci, Cynthia Osterman and Marguerita Choy)

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