If Shell Finds Success In Brazil Exploration Then May Build New Refinery In The Country

Shell reports that it might build a refinery in Brazil if any of its oil finds prove to be commercially viable. "We prefer to refine oil here as it is cheaper," said John Haney, exploration and production director with the local unit of Shell. Haney said the oil Shell had found in Brazil so far was very heavy and required lower costs. "We save $3 per barrel that is produced if a refinery is close to the well," he said, explaining though that there were no firm plans for a refinery yet.

Shell is planning to drill a new well in August or September at its BC-10 block in the Campos basin to evaluate if there are chances of starting commercial production in the area, where the company had made four finds of heavy oil, 17 API grade. If the results are positive, Shell could start producing crude there after three years, Haney said.

He said signs of even heavier oil, API 10, had been found at the BS-4 block in the Santos basin, but that the company was focusing its exploration efforts on the BC-10. It has recently bought rights for another block close to BC-10.

Shell, which operates or participates in 15 blocks in Brazil, plans to spend $80 million on Brazilian exploration this year. It has already invested about $250 million since beginning exploration efforts in 1999. Shell officials also do not rule out divesting some of its Brazilian assets following the incorporation Enterprise Oil.

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