Brazil has a fresh oil boom as it revitalizes the tupi field

Petrobras, Brazil’s state-owned oil giant, is approaching a major step in redeveloping the Tupi oil field, one of the world’s largest deepwater reserves. The company is close to resolving a long-running tax dispute with Brazil’s National Petroleum Agency (ANP), which would allow it to extend Tupi’s operating contract for another 27 years. This move is critical for Petrobras to justify the billions of dollars needed to increase production at Tupi.

Discovered in 2006, Tupi has played a key role in raising Brazil to one of the world’s top 10 oil producers. Since then, the field has generated hundreds of billions in taxes and attracted major oil companies to Brazil’s pre-salt region. Today, Tupi still produces more than 760,000 barrels of oil per day, surpassing the production levels of entire countries such as Colombia and Venezuela. But with natural decline, Petrobras is keen to revive the field’s production.

Petrobras has outlined plans for infill drilling and new seismic surveys to improve production rates at Tupi. The company is also considering adding another floating production facility, an investment that could cost up to $4 billion and take years to develop. By pushing these efforts, Petrobras hopes to mitigate the natural decline that typically affects aging oil fields.

However, the tax dispute with the ANP remains a key obstacle. Petrobras argues that Tupi should be taxed as two separate fields – Tupi and Cernambi – while ANP sees it as one. Resolving this issue, which involves legal deposits of $2.6 billion, is essential for Petrobras and its partners such as Shell and Galp to move forward.

With global oil demand still robust, Petrobras’ ability to expand Tupi’s productivity could ensure Brazil remains a major offshore oil producer for years to come.

By Julianne Geiger for Oilprice.com

More top reads from Oilprice.com