This week in Pierce Points:
Indonesia rocked the nickel market. New rules unexpectedly re-opened the door for exports — with big implications for prices.
Zimbabwe nationalized platinum ground. The nation is taking back 28,000 hectares from leading producer Zimplats.
China admitted its oil output is plummeting. The government sees production falling 7% by 2020 — other experts predict even deeper declines.
The “value-added” craze hit Chile lithium. The world-leading producer wants battery makers in country — and is offering cheap supply.
Brazil announced two offshore bid rounds. A November auction is expected to be the biggest, offering new subsalt acreage.
Brazil’s Massive Oil Upside Explained In One Chart
As I’m writing this, I’ve got maps of four different continents open on my desktop.
It’s been a busy week. With projects advancing in all these far-flung locales, for gold, diamonds, copper, platinum and oil.
Given such, I’m sneaking away from geology for a brief moment to share one chart in regards to that last commodity. A small but critical bit of information released this week — which underscores exactly why the last item above on Brazil may be so important for the global oil and gas sector.
Here it is: a plot of global offshore liquids (oil and condensate) discoveries globally since 2010. Compiled by Norway’s Rystad Energy, one of the keenest observers in the global offshore space.
Rystad noted in an accompanying report this week that offshore liquids discoveries hit a seven-year low in 2016. With discovered volumes down a stunning 90% from 2010 levels. You can clearly see the damage lower commodity prices have wrought on industry activity.
But aside from overall discoveries, there’s an even more critical point here for oil and gas developers. Namely, the green segments in the bars above — representing liquids finds in offshore Brazil, including the prolific subsalt and presalt plays.
The massive upside from the Brazil offshore is clear from the 2010 discovery bar — when nearly 20 billion barrels of oil were found within presalt superfields like Tupi, Libra and Buzios
The following few years also saw major finds in Brazil (the green sections at the bottoms of the bars in 2011 and 2012). But you can see how things fell off after that, driven by a lack of new Brazil auctions since 2013.
That makes this week’s announcement of not one, but two bid rounds in Brazil this year very important. Even though these will be subsalt rather than presalt projects, this is undeniably one of the highest-impact exploration terrains on the planet.
There simply aren’t many places on Earth yielding multi-billion barrel discoveries these days. Meaning Brazil will definitely on the radar for the world’s majors and beyond, despite all the economic and political problems prevailing in the country right now.
The fact that E&Ps will be able to bid for 100% ownership of projects this year adds an intriguing twist. And Brazil’s government has promised reforms to oil and gas taxes, which would make things even more attractive for new projects.
Subsalt projects are also on a scale that smaller companies might be able to handle. Developers in the offshore space thus may want to consider the upcoming bid rounds, with details on the first auction (expected during the first half of 2017) likely to be released very soon.
Here’s to going nuts in Brazil,