Maersk Hopes to Bring New Drilling Method to Brazil

Maersk Oil & Gas, the only foreign oil major to take part in the first day of Brazil's fifth annual oil round on Tuesday, said it hopes to drill long horizontal wells at its four offshore areas.

"For Brazil, it would be a new method, and we hope it will increase productivity, especially on tight reservoirs," Peter Barnett, Maersk's general manager in Brazil, told reporters.

Maersk bought the rights for two shallow-water blocks in the Santos basin, one in partnership with Petrobras, which bought 70 of 83 oil blocks sold in the first day.

Maersk paid 746,200 reais ($249,565) for the S-M-610 block that it will develop on its own and 350,347 reais for the S-M-611, in which Petrobras has a 40 percent stake.

Barnett said the two blocks were "next door" to the one Maersk acquired in the previous sale. It also bought a concession to develop another area in 2001.

"The geology there is similar to our traditional areas in Denmark and Qatar, where we routinely drill horizontal wells of around 4,000 meters. We achieve five-times productivity there for three-times costs, and it tends to make commercial sense," Barnett said.

Maersk is in the phase of geological studies in Brazil and has no drilling obligations for now, he added.

Barnett avoided comments on Brazil's tax regime, which some other foreign companies and analysts say is too demanding given the low level of oil discoveries here so far.

Most recent finds have shown mainly small reserves of heavy oil at big depths, which companies say makes most projects too costly.