ExxonMobil to Buy 40% of Santos Block

The Brazilian unit of US oil company ExxonMobil (NYSE: XOM) has agreed to buy a 40% interest and the operatorship of the BM-S-22 deepwater block in Brazil's Santos basin from UK-based oil company Amerada Hess, an ExxonMobil spokesperson told BNamericas.

Amerada Hess also farmed out a 20% stake in the same block to Brazil's federal energy company Petrobras (NYSE: PBR), the spokesperson said.

Petrobras could not immediately confirm the operation. The operation is still pending approval from hydrocarbons regulator ANP, the official said.

The agreement raises significantly ExxonMobil's interest in Brazil since it only had 30% non-operating stakes in the BC-10 and the BM-C-25 blocks in the offshore Campos basin. Amerada Hess will retain a 40% share in the block, which is the company's only remaining exploration asset in Brazil.

BM-S-22 covers 2,769sq km. and is located some 330km from the Rio de Janeiro coast and has water depths of 2,100-2,400 meters.

The block's operatorship was awarded to Amerada Hess in licensing round three in 2001, and the company later bought a 20% stake from US oil firm Devon Energy. "There is no record of important finds in or near the block, but it is interesting because Amerada managed to carry a farm-out to major players so there must have been a worthwhile negotiation behind this," Mauro Andrade, an analyst at Deloitte Energy Group, told BNamericas.

The Santos basin gained importance in 2003 after Petrobras discovered 419 billion cubic meters of natural gas reserves in the BS-100 and BS-500 blocks, which are located just over 100km from the coast. Amerada's initial exploration plan presented to ANP included 2,500km of seismic studies by the end of 2004 and the drilling of two exploratory wells by 2007.

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