Categories: Economy

Brazil Offshore Oil Hit by Regulator’s Crackdown on Drilling

(Bloomberg) — Brazilian regulators are cracking down on some offshore drilling by oil giants like Petrobras and Equinor ASA, complicating exploration and manufacturing initiatives at a key second within the nation’s effort to spice up crude output.

The drilling delays will complicate the nation’s efforts to reverse final 12 months’s oil-production decline. Previous to 2024, Brazil had been a booming supply of non-OPEC provide development in world oil markets. Ought to output proceed to flatline in 2025, that will sign to the OPEC+ alliance that it could possibly start elevating exports with out risking a price-killing provide glut.

Though some drilling halts resulted from critical questions of safety — a Feb. 14 pump failure triggered an explosion aboard a Valaris Ltd. drillship working for Equinor — others have been suspended for seemingly minor points that usually wouldn’t trigger disruptions, in response to executives who requested to not be recognized discussing delicate data.

No less than three different drillships have been halted in current months, in response to among the individuals. The stoppages are slowing each exploration for untapped oil fields and the drilling of auxiliary wells in older discoveries. Two Petroleos Brasileiro SA rigs have been quickly suspended as of Feb. 20, prompting the institution of a working group to higher handle regulatory considerations, the state-owned oil firm wrote in response to requests for remark.

The oil regulator, referred to as the ANP, mentioned in response to questions that three rigs have been halted or partially halted prior to now two months, including that it solely intervenes in conditions of grave and imminent danger. The interventions will proceed till the operators affirm that the issues have been resolved, in response to the regulator.

Brazil pumped extra oil than most OPEC members final 12 months with 3.4 million barrels of every day output — sufficient to account for roughly 3% of world provides.

Unplanned shutdowns and licensing delays dogged the Brazilian oil trade in 2024. The Worldwide Vitality Company, Rystad Vitality AS and Wooden Mackenzie Ltd. all forecast an output enhance by Latin America’s largest supply of crude final 12 months, solely to be upset.

The rise in drilling stoppages started in December and coincided with the departure of the earlier head of the ANP, in response to the executives, who requested to not be named discussing personal data. The suspensions have despatched a chill by way of Rio de Janeiro oil circles as explorers and contractors face the prospect of a extra restrictive working atmosphere.

One of many drillships that has been halted is the NS Carolina that’s a part of Ventura Offshore Holding Ltd.’s fleet of 4 vessels, in response to among the individuals. Ventura confirmed in a submitting Tuesday that the drillship had an order of interdiction in January that requested enhancements in sure emergency procedures, and that the corporate expects the interdiction to be lifted in a short while.

Within the NS Carolina’s case, the ANP mentioned that there was a failure within the execution and implementation of a gas-dispersal examine that compromised the rig operator’s skill to detect leaks.

Ventura’s Oslo-traded shares fell as a lot as 9.5% on Tuesday to 22.40 kroner earlier than recovering among the losses.

To make certain, Brazil is thought to have impartial regulators with stricter environmental and security requirements than different areas, together with the US Gulf of Mexico.

Equinor Subject

The ANP has suspended work by the Valaris DS-17 drillship at Equinor’s Bacalhau subject till the operator can reveal that it could possibly function safely, in response to an incident report dated Feb. 17 that was reviewed by Bloomberg. A 386-pound (175-kilogram) cowl blew off a pump throughout drilling operations, in response to the report.

In an announcement, Equinor mentioned the “incident” induced no accidents or spills and can have no important affect on operations, including that it’s going to make clear the explanations for the malfunction so it could possibly resume operations. Equinor is planning to begin manufacturing at Bacalhau this 12 months and steadily ramp as much as as a lot as a lot as 220,000 barrels a day throughout the first part of the challenge.

(Updates to incorporate response from Brazil’s oil regulator beginning in fifth,tenth paragraphs.)

admin