#shell company

Expensive offshore exploration setbacks for international oil majors including Shell Plc and Exxon Mobil Corp. are throwing cold water on their plans to turn Brazil into a profit center.

In the past three years, Shell has drilled three exploration wells without finding any commercial volumes, said Marcelo de Assis, the head of Latin American upstream research at consultant Wood Mackenzie Ltd. Shell and its partners paid just over $1 billion for the rights to explore the three blocks. The three wells Exxon Mobil has drilled in Brazil’s waters since late 2020 are also non-commercial, which cost $1.6 billion to access. 

Brazil has sold more than $10 billion worth of exploration acreage to Petroleo Brasileiro SA — the nation’s most dominant explorer — and international majors since 2017. So far, the world’s most experienced drillers have little to show for it. The last knock-out oil discovery in Brazil was made by Petrobras more than a decade ago, and the underwhelming results since then could indicate the biggest fields in the country’s so-called pre-salt region have already been found. 

“Shell has had a string of failures similar to Exxon,” said de Assis. “All the blocks acquired by Shell were unsuccessful” so far. 

Shell SHEL.L announced on Friday it has applied for a license from Brazil's environmental agency Ibama to generate offshore wind power in six areas in the country.

The six projects are located in the Brazilian states of Piaui, Ceara, Rio Grande do Norte, Espirito Santo, Rio de Janeiro and Rio Grande do Sul. The total installed capacity of the projects will be 17 gigawatts.

Brazil is attracting growing investment to convert by-products from its biofuel industry into emerging types of low-carbon fuels, as firms seek to take advantage of the country's vast renewable energy potential.

UK-based Shell, Brazil's top private-sector oil producer, is studying the conversion of organic residues produced by the sugar and ethanol industry — namely vinasse and filter cake — into biohythane, a gaseous blend of biologically derived hydrogen and methane. Shell is using technology developed by Unicamp, a public research university in the state of Sao Paulo.

Shell plans to spend 6mn reals ($1.24mn) over the next four years, including construction of a biohythane pilot plant that would be operated by university staff until potentially being scaled up to industrial production levels by Shell.