South American Spotlight

Michael Borrel, EIC

March 1, 2017

Old and new provinces continue to bring forth new activity in Latin America, from new finds in Guyana to the ongoing pre-salt programs in Brazil. Michael Borrel sets out the detail.

Latin America has become increasingly attractive to both local and foreign investors. Mexico held its first ever offshore deepwater auction (Round 1.4), open to both local and international firms, in December 2016, which was comprised of 10 blocks in both the Perdido and Salina Basins in the Gulf of Mexico.

Eight of the 10 blocks were awarded to some of the largest oil and gas firms in the world, including BP, Chevron, CNOOC, ExxonMobil, Statoil and Total. Mexico’s Round Two auctions, which will include both onshore and offshore blocks, will take place in summer 2017.

Pemex, Mexico’s state-owned petroleum company, is set to increase production at its Abkatun-Pol-Chuc offshore reservoir complex, which is made up of 18 fields, of which 10 are currently productive. However, the reservoir complex is temporarily out of service due to a fire that destroyed the production platform. The engineering, procurement and commissioning (EPC) contract for the construction of a new platform was awarded to McDermott.

Sea Trucks Group (STG) was awarded a contract for its Jascon 31 vessel to provide accommodation and lifting services.

During the December round, Mexico awarded Australia’s BHP Billiton a 60% operatorship farm-out to partner with Pemex in its Trion development, which is in the deepwater Perdido area.

Source: EICDataStream

Brazil

Recent offshore contracting activity in Brazil has been mainly associated with Petrobras projects, with key contracts awarded for the massive Libra field in the pre-salt province. In September 2016, local company MFX do Brasil was awarded the supply of 33km of umbilicals for Libra’s extended well test, while in November 2016, Halliburton obtained a contract to provide drilling services and equipment for the construction of up to nine wells.

The much-delayed tender for the 20-year charter of an FPSO for Libra’s pilot production project has encountered another setback. A federal court has suspended the bidding process following an injunction from Brazil’s shipbuilder’s association SINAVAL, which claims that Petrobras is not complying with local content requirements.

Another Petrobras project closely watched by the industry is the expansion of the Mexilhão fixed gas platform. Local player Enaval was confirmed in September 2016 as the EPC contractor, with Radix Engenharia responsible for the detailed engineering.

Statoil, Brazil’s second largest oil and gas producer, is progressing with the second development phase of the Peregrino heavy oil field. Cameron Sense, a Schlumberger unit, is understood to be supplying the drilling equipment package for the field’s third wellhead platform, known as WHP-C.

Guyana

Last December, in neighboring Guyana, SBM Offshore was awarded a contract by ExxonMobil to perform front-end engineering and design for a 100,000 b/d FPSO that will operate on the Liza oil field. Subject to a final investment decision in 2017, SBM will also build, install and operate the production unit.

Argentina

Meanwhile, in July 2016, in Argentina, Enap Sipetrol awarded a contract to STG for pipelay work on the Magallanes field. The contract scope includes, among other elements, the engineering, project management and installation of three pipelines of different sizes.


Michael Borrel
is Regional Analyst (North & Central America) at Energy Industries Council (EIC). Michael is the EIC’s Regional Analyst for North and Central America. He researches and analyses project information and contracting activity in the oil and gas, power, nuclear and renewables sectors in these regions.