Karoon’s highest priority is to deliver safe, reliable, responsible and cost-effective production from its Brazilian operations, while minimising its impact on the environment and fostering positive relationships with local communities.
Since acquiring a 100% interest in BM-S-40 (known as Baúna), Karoon has invested more than US$300 million in the successful Baúna intervention campaign and the Patola development over FY21 to FY23. As a result, production increased materially from ~12,600bopd prior to the programs to peak at over 40,000bopd following start-up of Patola. Similar to many mature oil projects, the production rate is anticipated to decrease due to natural depletion.
Karoon is evaluating both potential organic and inorganic offshore growth opportunities to leverage the Company’s core skills and existing operational footprint.
Karoon entered Brazil in 2007, following the award of five exploration blocks in the offshore Santos Basin. Currently, Karoon has a 100% working interests in four blocks, including the producing Baúna, Piracaba and Patola fields and the Neon and Goiá oil discoveries.
Karoon believes Brazil is an attractive place to invest in the oil and gas industry due to:
- High prospectivity for oil and gas in offshore conventional reservoirs.
- Well-established oil and gas industry, with an established regulatory regime.
- Favourable tax-royalty contract terms for post-salt licences.
- Well-developed drilling and services sector.
- World class professional labour force.
- Active asset trade market.
Previously dominated by State-owned Petrobras, the Brazilian upstream sector was opened up to foreign investment in 1998, through the first Bid Round. Many international companies, including BP, Shell, Chevron and Equinor, as well as numerous smaller independent companies, such as Karoon, are now active in all aspects of exploration and production in Brazil. The internationalisation of the Brazilian oil and gas industry has brought access to global financial markets, with the sector well served by debt and equity markets, providing the capital required to fund operations and support growth projects.
According to the EIA, Brazil was the 9th largest oil producer in the world in 2022. Based on Brazil’s Department of Mines and Energy’s 2031 ten year Energy Expansion Plan, Brazil’s national oil output is expected to grow further, from 3 MMbopd to 5 MMbopd, by 2028. This could take the country into the top five oil producers globally according to the International Trade Administration. Recognising the importance of the industry to Brazil’s economy, successive governments, including the new Government elected in November 2022, have remained supportive of the industry. In 2022, several producers, including Karoon, gained royalty concessions for incremental oil production from mature or marginal fields.
The service sector backing the industry is well developed. The world’s leading drilling contractors and well servicing and evaluation companies are active and competitive in Brazil, with established in-country operations. For oil and gas companies, there is a deep pool of highly trained geoscientists and engineers.
Karoon believes that given its current size, production base, core skills and access to capital, it is well positioned to participate in future asset sale processes, either alone or in partnership with like-minded companies.