Norway's Statoil moves closer to South American oil prize

Company this week expanded its regional footprint by taking a greater position in the lucrative Santos basin off the coast of Brazil.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |   July 14, 2017 at 7:53 AM
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July 14 (UPI) -- Norwegian energy company Statoil said Friday it extended its reach beyond Norway to acquire stakes in what could be one of South America's biggest prizes.

Statoil took a 33.3 percent interest in so-called Block 59 off the coast of Suriname in a consortium that includes U.S. counterparts Exxon Mobil and Hess Corp. It was awarded the role of operator after taking a 100 percent interest in so-called Block 60.

"Block 59 is a potential extension of the trend on which the Liza discovery was made in neighboring Guyana," the Norwegian company explained.

Exxon Mobil and Hess made a final investment decision for offshore Guyana in the Liza discovery, one of the largest oil finds in years, in June. The companies put the reserve estimate for the broader area offshore Guyana at between 2 billion and 2.5 billion barrels of oil equivalent.

Hess Corp. said the development cost of $3.2 billion was considered relatively low for a field that could yield 450 million barrels of oil after first oil is on stream by 2020.

Liza has "attractive" economics, according to Hess, with oil prices as low as $40 per barrel. Brent crude oil was trading at about $48 per barrel early Friday.

The first phase of development will utilize a floating production, storage and offloading vessel with the capacity to process as much as 120,000 barrels of oil per day from four drilling centers.

The broader Guyana−Suriname basin is estimated to hold around 12 billion barrels of oil.

"These awards build further materiality to Statoil's exploration position offshore Suriname," Nick Maden, a vice president for exploration at Statoil, said. "This is frontier acreage with high potential, sitting on a trend of recent discoveries."

The move followed a Statoil decision to take a 10 percent stake in a license area in the lucrative Santos basin offshore Brazil, bringing the hold for the Norwegian energy major up to 76 percent in the $379 million deal.

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