Shell Starts Drilling Deepwater Oil Well Near Tupi Field Offshore Brazil

Royal Dutch Shell Plc, Europe’s largest oil company, started drilling a well off Brazil’s coast near the Tupi field, the largest discovery in the Americas in more than three decades, said the nation’s oil regulator.

The regulator, known as ANP, announced Shell’s drilling development, 1-SHEL-23-RJS, today on its website. The well is in the Santos Basin’s BM-S-54 block, north of Tupi, which was the Americas’ largest discovery since Mexico’s Cantarell in 1976. The well is also close to the Iara and Iracema oil fields.

Shell sold 20 percent of the block to Paris-based Total SA in June, and last week said it is selling stakes in four other offshore Brazil blocks. Shell is selling non-crucial areas to help finance investments in its so-called core assets, said Michael Wang, an analyst at IHS Herold in Norwalk, Connecticut.

“Some of the established players are taking advantage of market opportunities to sell assets, and people are willing to pay premiums for Brazil,” said Wang in a telephone interview. Brazil “remains a core asset for Shell.”

Shell is producing oil at the Bijupira-Salema and Parque das Conchas projects in the Campos Basin. The four blocks Shell is selling, BS-4, BM-S-8, BM-S-45, and BM-ES-28, are in areas containing more natural gas than oil and considered less strategic for Shell, Wang said.

Shell joins Spain’s Repsol YPF SA, Brazil’s OGX Petroleo & Gas Participacoes SA and Norway’s Statoil ASA in selling oil assets in Brazil to raise money for development costs.

To contact the reporter on this story: Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net

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