Frade Leak to Impact Pre-Salt Exploration - IEA

The recent oil leak in the Frade field offshore Brazil operated by US oil major Chevron is likely to complicate the exploration plans of Brazilian NOC Petrobras in the prolific pre-salt area, according to a report from the International Energy Agency (IEA).

"A leak at the Chevron-operated Frade concession will likely have longer-term implications. The government is likely to ensure that all companies invest more in environmental safety measures. Rising costs, logistics constraints, and local content restrictions are likely to slow Petrobras' ambitious oil expansion plans," the report says.

Chevron was stripped of its drilling rights by Brazil's ANP hydrocarbons regulator in the aftermath of the Frade spill, during which around 2,400b of crude was leaked.

Experts have subsequently warned that the spill shows the country is not sufficiently prepared for E&P in ultra-deepwater areas such as the pre-salt, with greater investment in research needed in order to guarantee safety and mitigate environmental risks.

Despite its warnings, IEA still expects Brazil to post an overall production increase of 1Mb/d over the 2010-16 period, largely on the back of success in the pre-salt region.

The agency believes up to 900,000b/d will come online within the next five years from the massive Guará, Lula, Parque des Baleias, and Baleia Azul fields.

According to the report, output is likely to remain at the August average of 2.1M-2.2Mb/d going into the New Year. Anticipated maintenance work in the middle of next year is likely to remove around 50,000b/d in production, leading IEA to trim its expected production growth for the year to come by e,00b/d.


In the same report, IEA said that labor protests in both Argentina and Colombia had affected oil production averages.

Strikes in the provinces of Santa Cruz and Chubut in the former country removed around 100,000b/d in 2Q11, denting Argentina's annual production average by around 40,000b/d.

Labor disputes at the Quifa and Corcel blocks across September meanwhile shaved around 30,000b/d off Q3 production in Colombia.


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