Shell to Start Output at Brazil BC-10 Oil Block in 2009-Valor

RIO DE JANEIRO, May 8, 2008 (Dow Jones Newswires)

Royal Dutch Shell PLC (RDSA) next year will start producing from heavy oil fields in the BC-10 block in Brazil's Campos Basin, the Valor newspaper said Thursday.

The company will install its Espirito Santo platform that is slated to pump from the Ostra, Abalone and Argonauta fields in the block and has an output capacity of 100,000 barrels a day.

Shell has a 50% operating stake in the BC-10 block off Espirito Santo state, while Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, holds another 35%, and India's state-run Oil & Natural Gas Corp. (500312.BY) has 15%.

In a second phase of the project, Shell will also start producing from the Nautilus field in the same oil block. Shell has previously said it estimates potential oil reserves in the BC-10 block of 400 million barrels.

Shell is also preparing to produce from the extra heavy Atlanta and Oliva fields in the BM-S-4 block in the Santos Basin further south off Brazil's coast, but hasn't given a date for production start there yet.

Shell is the lead operator of the block with a 40% stake. Petrobras holds 40% and Chevron Corp. (CVX) the remaining 20%.

Shell currently already produces little more than 30,000 barrels a day from the twin Bijupira and Salema oil fields in the Campos Basin.

The company also has a 40% non-operating stake in the BM-S-8 block in Brazil's ultradeep pre-salt play in the Santos Basin, where the Bem-Te-Vi find was made recently. The BM-S-8 block is adjacent to the BM-S-9 block where Petrobras has made its promising Carioca find.

In April, Haroldo Lima, the head of Brazil's National Petroleum Agency, or ANP, sent shock waves through the oil world when he said reserves in the area around Carioca could contain 33 billion barrels of oil equivalent, or BOE.

Industry experts and analysts told Dow Jones Newswires that Carioca is part of a gigantic geographical structure that may contain several huge oil fields. That structure stretches across the BM-S-9 block, the BM-S-8, the BM-S-21 and the BM-S-22, the experts said.

The BM-S-8 block is operated by Petrobras with a 50%stake. Next to Shell's 40% stake, Portugal's Galp Energia (GALP.LB) holds another 10%.

RIO DE JANEIRO, May 8, 2008 (Dow Jones Newswires)


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