(Bloomberg) – Shell Plc is looking to sell a 20% stake in a Brazilian oilfield cluster to help fund the multibillion-dollar offshore development, according to people familiar with the process.
The UK supermajor agreed to acquire TotalEnergies SE’s stake in the cluster earlier this year through an asset swap, and is looking to raise money while remaining operator, said the people, who asked not to be identified as they’re not authorized to speak publicly.
Gato do Mato, as the cluster is known, is expected to commence output in 2029 with the capacity to produce 120,000 barrels a day. It’s key to Shell’s wider goal of maintaining a position among Brazil’s largest oil producers. Tapping the fields, whose name means “jungle cat” in Portuguese, is intended to play a crucial role in helping offset declining crude output from aging Brazilian developments that have been pumping for a decade or more.
Shell holds minority stakes in other assets in the area, called the pre-salt, and last week expanded its interests in two fields during an auction. Ecopetrol SA also owns a stake in Gato do Mato.
Parque das Conchas, the only active Brazilian oilfield where Shell currently controls operations, has passed its peak and now pumps about 30,000 barrels a day.
Shell declined to comment on whether it is seeking a partner for Gato do Mato in an emailed response to questions.
Shell’s search for another partner highlights how even the largest international oil explorers routinely ally with rival companies to help cover investments. Shell made a final investment decision on Gato do Mato in March after escalating costs led to several years of delays.
The project is expected to cost nearly $3 billion, assuming that the production and storage vessel is leased, according to consultancy Welligence Energy Analytics. Shell hasn’t disclosed a pricetag for the development and declined to comment on the size of the investment.
The two fields at Gato do Mato, which were re-named Orca and Sul de Orca after they were declared commercial, account for about 10% of Shell’s Brazil portfolio, according to Welligence.
Shell is also exploring Brazil’s Equatorial Margin deepwater region, an environmentally sensitive area where national oil company Petroleo Brasileiro SA began drilling in October.
While Gato do Mato’s 370 million-barrel trove of recoverable resources is smaller than other deepwater discoveries in Brazil, it will help limit how quickly oil production declines in the 2030s after output starts to fade at the country’s biggest fields.
“The assets are challenging, like most pre-salt developments, being far from the coast and located in deep reservoirs with high pressure and low temperature,” said Andre Fagundes, who covers Brazil for Welligence. Another partner will reduce Shell’s “capital exposure” while allowing the company to maintain operational control of the project, he added.
