Shell and Petrobras forge stronger ties seeking new exploration and decarbonisation opportunities

UK-headquartered energy giant Shell has joined forces with Brazil’s state-owned oil and gas player Petrobras, thanks to a long-term deal inked between the two companies, as they embark on a quest to unlock new upstream and energy transition opportunities.

Petrobras revealed on Thursday, 9 March 2023, that its CEO and Shell´s CEO, signed a memorandum of understanding (MoU) during CERAWeek in Houston, in a bid to “encourage discussion and collaboration” between the companies.

Wael Sawan, Shell’s CEO, commented: “As Shell celebrates our 110th anniversary of working in Brazil, this exciting agreement reinforces both the significance of the country within our global portfolio, and our strong partnership with Petrobras.”

Thanks to the five-year deal, the two players will work together on identifying potential upstream opportunities, sharing experiences and best practices on reducing carbon emissions, social and environmental initiatives.

According to Petrobras, the non-binding agreement focuses on potential exploration opportunities in and beyond the pre-salt, including the Equatorial Margin while also contemplating energy transition efforts, with an emphasis on renewables and carbon capture, utilisation and storage (CCUS).

On the environmental front, the two companies aim to establish projects to preserve and restore biodiversity, with the goal of issuing credits to offset carbon emissions. In addition, the two energy giants will explore working together on social investment projects.

Moreover, Petrobras claims that this partnership demonstrates the companies’ appreciation of strategic synergies in E&P projects that include decarbonisation initiatives, which are important in transitioning to a low-carbon economy. Additionally, it reinforces the firms’ intention to seek new opportunities together in Brazil and abroad.

Jean Paul Prates, Petrobras’ CEO, remarked: “Being able to rely on partners, such as Shell, is vital for Petrobras’s future plans, because partners can add their strength to areas where the company is looking for profitable diversification, such as renewables and hydrogen. We will be looking to learn from the main players as we lead Petrobras towards a fair energy transition.”

Based on the Brazilian giant’s statement, committees with representatives from both companies will be set up to monitor the progress of the various studies and discussions. After the conclusion of technical analyses by a multidisciplinary group, Petrobras says that projects arising from the agreement will have official estimates of cost and return.

Meanwhile, these two companies have a long track record of working together on research and development into the technology of mutual interest, having signed in 2020 a strategic technical cooperation agreement. Currently, Petrobras and Shell are working together on assets in Brazil, such as, among others, Tupi, Sapinhoá, Mero, and Atapu.

Regarding the recent developments at the Mero field in the Santos Basin, it is worth noting that the FPSO Guanabara, which is working at the field, reached its maximum production capacity, with the mark of 180,000 barrels of oil per day (bpd), about eight months after the unit started operating.

Mero is Brazil’s third largest field by volume of oil in place, behind only Tupi and Búzios, also located in the pre-salt Santos Basin.