Key Findings

Brazil's oil sector appears more attractive than it has for a few years. State oil company Petrobras is experiencing a steady production growth, and some of the concessions held by international oil companies (IOCs) are finally beginning to yield results.

Shell began production at the Bijupirá-Salema fields in 2003, and several projects operated by Chevron, Devon Energy and El Paso are due to come onstream in the coming years.

Petrobras will continue to play a dominant role in the upstream sector. It has been a heavy bidder in the annual rounds, either on its own or in partnership with private companies, and has also been the most successful in terms of commercial discoveries in exploration blocks awarded since 1998.

Most of Petrobras's production growth over the next five years is set to come from the addition of new modules in producing fields in the Campos Basin.

Brazil is also set to see an increase in light oil and natural gas production in the coming years.

More exploration successes are needed to ensure continued production growth beyond 2010-15 and interest in new licensing rounds.

Historical Background

The Opening of the Oil Sector and the Modernisation of Petrobras

The Brazilian oil sector underwent a radical transformation during the 1990s. A constitutional amendment in 1995 opened up the oil industry to private participation, while the Petroleum Law of 1997 (Law No. 9,478/97) created a regulatory body for the oil sector and ended the monopoly of the state oil company over oil exploration and production. In 1998, Petrobras transferred 93% of its exploration and production concessions to the ANP, the oil regulator, for future auction to domestic and foreign oil companies. In June 1999, the ANP held the first of a series of annual oil licensing rounds open to participation by private companies. 

The state oil company also underwent reforms under the administration of Fernando Henrique Cardoso (1995-2002). In August 2000, the government sold a 28.5% stake in Petrobras, diluting its total ownership of common shares in the company from 84% to 55.7%. The following year, the state-owned national development bank BNDES sold a further 3.5% of the company's total capital, which it managed for the federal Treasury. The decision to open up Petrobras to private investors increased the company's autonomy from the government. At the same time, the professional management of the presidents appointed by the Cardoso government - Henri Philippe Reichstul and Francisco Gros - allowed Petrobras to improve its efficiency and international competitiveness.

Brazilian National Oil Production 1994-2003 (000' Barrels)
	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003
Onshore	64,438	64,732	71,226	71,639	76,421	75,210	76,316	77,170	78,952	79,732
Offshore	178,272	186,977	214,364	234,344	278,234	325,572	374,310	394,692	451,902	466,342
National Total	242,709	251,709	285,590	305,983	354,655	400,782	450,626	471,862	530,855	546,074
Source: ANP, Anuário Estatístico 2004

 

Summary of Rounds 1-6

The six annual exploration licensing rounds held to date have raised a total of 2.2 billion reais (US$946.9 million) in signature bonuses and have resulted in the entry of a large number of new players in the upstream sector.

Summary of Brazil's Former Licensing Rounds
	Round 1 1999	Round 2 2000	Round 3 2001	Round 4 2002	Round 5 2003	Round 6 2004
Total Number of Blocks Offered	27	23	53	54	908	913
Total Number of Blocks Awarded	12	21	34	21	101	154
Signature Bonus (million reais)	322	468	595	92	27	665
Qualified Companies	38	42	42	29	12	24
Bidding Companies	14	27	26	17	6	21
Winning Companies	11	16	22	14	6	19
Names of Winning Companies	Texaco Repsol-YPF Unocal Esso Kerr-McGee Petrobras Shell Amerada Hess BP British Borneo Eni	Santa Fé Shell SK UPR Repsol-YPF PanCanadian Petrobras Petrogal Queiroz Galvão Rainier Amerada Hess BG Chevron Coastal Ipiranga Odebrecht	Rainier Repsol-YPF Samson Shell Statoil Total Wintershall Ocean PanCanadian Petrobras Petrogal Petroserv Phillips Queiroz Galvão Amerada Hess El Paso Enterprise Esso Ipiranga Kerr-McGee Koch Maersk	Shell Starfish Statoil Unocal Newfield Partex Petrobras PetroRecôncavo Queiroz Galvão BHP Billiton Devon Energy Dover El Paso Maersk	Partex Petrobras Synergy Group Corp Aurizônia Empreendimentos Ltda. Maersk Newfield	PortSea Oil & Gas NL Queiroz Galvão Perfurações S.A. Repsol-YPF Shell SK Corporation Starfish Oil & Gas S.A. Statoil Synergy Group Corp W. Washington Empreendimentos e Participações Ltda. Arbi Petróleo Ltda. Aurizônia Empreendimentos Ltda. Devon Energy Corporation EnCana Corporation Epic Gas International Serviços do Brasil Ltda. Kerr-McGee Partex Petrobras Petrogal S.A. PetroRecôncavo S.A.
Number of Blocks Awarded to Petrobras (Number as operator)*	5 (3)	8 (7)	15 (13)	8 (8)	88 (85)	107 (87)
Source: ANP *Source: Petrobras Results of the so-called Round Zero held in 1998 in which Petrobras was awarded a number of concessions are not included, because no other company was eligible to participate.

Petrobras has continued to play a dominant role in the upstream sector as a heavy bidder in the annual rounds, either on its own or in partnership with private companies. It has also been the most successful in terms of commercial discoveries in exploration blocks awarded since 1998.

Oil and Gas Discoveries Declared Commercially Viable in Concessions
Block	Field	Basin	Date	Operator
BT-POT-4	ACAUÃ	Potiguar	30/06/2005	Petrobras
BT-SEAL-2	ANAMBÉ	Alagoas	05/04/2005	Petrobras
BT-REC-10	LAGOA DO PAULO NORTE	Recôncavo	02/03/2005	Recôncavo E&P SA
BT-REC-3	UIRAPURU	Recôncavo	11/02/2005	Petrosynergy (Maritíma Petróleo e Engenheria Ltda)
REC-T-41	JANDAIA	Recôncavo	02/02/2005	Petrobras
BPOT-100A	SALEMA BRANCA	Potiguar	22/12/2004	Petrobras
BC-60	BALEIA ANÃ	Campos	20/12/2004	Petrobras
BC-60	BALEIA AZUL	Campos	03/12/2004	Petrobras
BS-1	LAGOSTA	Santos	17/09/2004	El Paso
SEAL-100	PIRANEMA	Sergipe	30/08/2004	Petrobras
BA-3	JAPIIM	Amazonas	21/05/2004	Petrobras
BA-3	AZULÃO	Amazonas	21/05/2004	Petrobras
BT-REC-10	LAGOA DO PAULO	Recôncavo	02/04/2004	. .
BES-100	GOLFINHO	Espírito Santo	15/01/2004	Petrobras
BC-60	BALEIA FRANCA	Campos	15/01/2004	Petrobras
BS-400	MEXILHÃO	Santos	15/01/2004	Petrobras
BS-3	CAVALO-MARINHO	Santos	04/08/2003	Petrobras
BPOT-100A	GUAJÁ	Potiguar	30/01/2003	Petrobras
BC-60	CACHALOTE	Campos	27/12/2002	Petrobras
BC-60	JUBARTE	Campos	12/12/2002	Petrobras
BCAM-40	MANATI	Camamu	26/11/2002	Petrobras
BPOT-4	ASA BRANCA	Potiguar	29/08/2002	Petrobras
BPOT-10	SIRI	Potiguar	06/02/2002	Petrobras
BREC-11	CARDEAL	Recôncavo	07/11/2001	. .
BREC-9	CURIÓ	Recôncavo	06/08/2001	. .
BREC-11	BEIJA-FLOR	Recôncavo	06/08/2001	Petrobras
BPOT-6	ANGICO	Potiguar	26/03/2001	. .
FSR	FAZENDA SÃO RAFAEL	Espírito Santo	31/03/2000	. .
BCED	MOSQUITO	Espírito Santo	01/07/1999	. .
Source: ANP

Heavy bureaucracy, changes in the fiscal regime and an absence of significant commercial discoveries by new entrants were among the reasons given for reduced interest in Rounds 4 and 5. In the sixth licensing round held in 2004, there was revived interest by foreign companies in Brazil's oil sector because of steps taken by the Worker's Party (PT) government to address some of the fiscal concerns of oil companies and because of the inclusion of acreage relinquished by Petrobras where there was thought to be good chances of future commercial discoveries. Round Six raised 665 million reais in signature bonuses, more than any of the previous rounds, and is expected to generate 2 billion reais in minimum investments in the adjudicated blocks during the exploration phase.

Round Seven

It is perhaps too early to judge whether Round Six represents a significant turning point in terms of IOC interest in new licensing rounds. Despite the relative success of Round Six, with the exception of Shell, none of the majors has acquired any exploration blocks in any of the annual rounds held since 2003, which suggests that there is still considerable caution amongst the larger players with regard to committing heavy investments to new deepwater exploration in Brazil. Round Seven's aim of focusing more on areas with gas potential may be frustrated by the current political crisis, which threatens to slow voting on new gas legislation. Disappointing drilling results at BP and partners' offshore blocks, BFZ-2 and BM-FAZ-1, in the Foz de Amazonas Basin, could also make foreign companies more reluctant to consider new investments in frontier regions. Whatever interest there is in Round Seven from large and mid-sized foreign companies is likely to be focused primarily on any blocks close to existing discoveries in the Campos, Santos and Espírito Santo Basins .

Brazil's Round Seven

The ANP has announced plans to hold Brazil's seventh oil and natural gas licensing round in October 2005. It plans to offer a total of 1,134 exploratory onshore and offshore blocks located in 34 sectors of 14 sedimentary basins: Pelotas; Santos; Campos; Espírito Santo; Jequitinhonha; Camamu-Almada; Recôncavo; Sergipe-Alagoas; Potiguar; Barreirinhas; Pará-Maranhão; Foz do Amazonas; Solimões; and São Francisco. One of the aims of the round is to boost domestic gas production, and 43 of the blocks on offer are believed to have the potential for gas discoveries. Of the total blocks, 509 are onshore and 625 are offshore. Of the onshore and offshore blocks on offer, 609 are considered frontier regions with little prior geological knowledge about them available. However, the round also includes 438 onshore mature blocks and 87 offshore blocks located in areas in which there are thought to be better prospects of a commercial discovery. The ANP will also offer 20 marginal fields with small discoveries in four basins. The ANP hopes that the seventh round will generate up to 500 million reais in investments.

More information on Round Seven is available at: www.brasil-rounds.gov.br.

Outlook for Foreign Companies: More Positive

Seven years after the opening of the oil sector, foreign companies are less optimistic about the prospects for significant new discoveries to be made in Brazil's deepwaters, and this may affect participation in forthcoming licensing rounds. However, companies are currently stepping up investments in their existing concessions, which suggests an increase in investor confidence compared to as recently as 2002, when Luiz Inácio Lula da Silva, the veteran candidate of the leftwing PT, won a landslide victory in the presidential elections. This may in part reflect a reduction in anxieties related to the PT, which once in government adopted orthodox economic policies and essentially left the free market reforms introduced by its predecessor untouched, apart from plans to reform the regulators for the privatised industries and apart from an increase in political interference in Petrobras. However, the main reason behind new investments planned by existing operators is that some of their concessions are finally beginning to yield results.

New Production Projects

Petrobras's operations account for over 90% of national oil production, with output from fields operated by private companies restricted to a few Brazilian companies and Shell, which began production at the Bijupirá-Salema fields in 2003. However, several projects operated by Chevron, Devon Energy and El Paso are due to come onstream in the coming years.

New Production Projects Under Development or Proposed by Foreign Operators
Company	Field (Block)	Basin	Start Date	Actual/Anticipated Production Volume	Comments
*Chevron/Petrobras/Nissho Iwai	Frade	Campos	2008	100,000 b/d	The field was discovered in 1986 and has 250 million barrels of reserves. Production is expected to peak three years after the start date.
Devon Energy* (60%)/SK Corp. (40%)	Polvo project (Block BM-C-8)	Campos	2007	50,000 b/d	On 30 June 2005, Devon Energy announced that it planned to begin production at Block BM-C-8 in 2007. The company made an oil discovery on the block in 2004. The block has an estimated 50 million barrels of oil reserves, but the company believes that future exploration may result in the reserves' potential increasing.
Shell* (80%)/Petrobras (20%)	Bijupirá-Salema	Campos	2003	Average production in 2004 around 51,000 b/d	Shell became the first privately owned company to produce oil in Brazil, following the start of production at the Bijupirá-Salema fields on 12 August 2003. The fields were discovered by Petrobras in 1990. Oil production from the fields is currently exported abroad.
El Paso*/Petrobras	Lagosta (BS-1)	Santos	2007	. .	. .
El Paso*/Petrobras/Ipiranga	Sardinha	Camamu	. .	. .	. .
* Operator

 

Several other discoveries are being appraised. If they are declared commercially viable, further production increases can be expected in the future. The most promising discoveries include: 

BC-10 Block (Campos Basin): Shell is the operator of BC-10 with a 35% stake. Its partners are ExxonMobil (30%) and Petrobras (35%). Shell has already made several discoveries in this block with 18-24º API. According to an Upstream report in June 2005, it plans to drill two more appraisal wells in the fourth quarter of 2005, with the hope of declaring the cluster of fields commercially feasible by the end of the year. Production could reportedly begin in 2009. The company has previously stated that it may decide to build a refinery in Brazil in order to reduce the costs of producing heavy oil from the block.

BS-4 (Santos Basin): BS-4 is operated by Shell in partnership with Petrobras (40%) and Chevron (20%). Heavy oil reserves are another area that is under consideration for possible commercial development.

BM-C-7 (Campos Basin): EnCana, with a 67% interest in the block, and Kerr-McGee, with 33%, drilled one exploration well and one appraisal well on this block in 2004. The companies reportedly found heavy oil reserves at the block, but further tests are needed to determine whether the find is commercially viable.

 

Petrobras Continues to Dominate the Sector

Exploration Successes

Petrobras's crude and condensate reserves rose in Brazil to 11.05 billion barrels of oil at end-2004, according to SPE criteria, while its proven natural gas reserves rose to 313.06 Bcm, bringing its combined oil and gas reserves in fields under concession to Petrobras in Brazil to 13.02 billion boe. This means that it has booked an additional 4.24 billion boe of proven reserves since 1998. Of the total combined proven reserves at end-2004, 44% is described as heavy oil (with an API gravity lower than 22°); 30% is intermediate oil (22-31° API); 11% is light oil (greater than 31° API); and 15% is natural gas. Petrobras's reserve life is 20 years, according to SPE criteria.

Most of Petrobras's reserves are located in deepwaters of the Campos Basin, but no field has been found in recent years to rival the Marlim field discovered in 1985 with 1.7 billion oil reserves or the Roncador field with 2.7 billion reserves. Nonetheless, Petrobras has had some notable exploration achievements since the opening of the oil sector in 1998, including:

Jubarte (Campos Basin): The Jubarte field, discovered in 2001 in Block BC-60, with estimated proven reserves of 600 million barrels of heavy 17º API crude oil, was Petrobras's largest oil find since the discovery of the Roncador field in the same basin in 1996. A pilot system is already producing 20,000 b/d, but production increases are expected in the coming years through the first two development phases. 

Cachalote (Campos Basin): The Cachalote field was discovered in Block BC-60 in the Campos Basin in November 2002 and was declared commercially feasible in December 2002. It has 350 million barrels of oil reserves. Development of this field is in the planning stage, and production will not start until after 2008. Taking into account the Jubarte and Cachalote fields and several new discoveries made in Block BC-60 during 2003, it is thought that accumulated oil reserves for the block could be as high as 2.5 billion boe.

Golfinho (Espírito Santo Basin): The Golfinho field was discovered in July 2003 with 250 million boe of reserves. The find was significant, because it contains light oil with 28-40º API. The pilot project is due to start production in August 2005.

Piranema (Sergipe-Alagoas): Piranema is thought to contain 76 million barrels of reserves of good-quality light oil with 43º API gravity. The Piranema and Golfinho finds were significant, because they were made outside of the Campos Basin and because they demonstrated the potential for light as well as heavy oil finds in Brazil.

Mexilhão and BS-500 (Santos Basin) and Manati (Camamu-Almada Basin): The discovery of the Mexilhão field in 2003 in the Santos Basin tripled the country's gas reserves. Other gas finds have been made in adjacent Block BS-500 and in Block BCAM-40 in the Camamu-Almada Basin.

 

New Production Projects

Petrobras has steadily been increasing production this year after seeing a 3% drop in production in 2004 following delays in the installation of new platforms. The state oil company set a new monthly oil output record in Brazil in June 2005, producing an average of 1.755 million b/d and bringing average production for the first half of 2005 to 1.637 million b/d, up by 11.5% from the same period of 2004. The higher output was reached because of the start of operations at the P-43 platform in the Barracuda field in December 2004 and the P-48 platform in the Caratinga field in February 2005, as well as increased operational efficiency at platforms off the states of Rio de Janeiro and Espírito Santo and increased production from fields in mature areas. The start of production at three more platforms in the Campos Basin in 2005 and the start of light oil production from the Golfinho field in the Espírito Santo Basin in August mean that further production increases are expected during the second half of 2005. As a result, Petrobras expects to produce 1.7 million b/d by end-2005 and to achieve oil self-sufficiency in 2006. 

Petrobras's Average Crude Oil and Natural Gas Liquids Production, 2002-04 (million b/d)
	2004	2003*	2002
Brazil
Campos Basin	1,204	1,252	1,217
Other Offshore Fields	38	39	40
Total Offshore Production	1,242	1,291	1,257
Onshore Production	251	248	243
Total Brazil	1,493	1,540	1,500
Total Overseas Production	168	161	35
Total Petrobras	1,661	1,701	1,535
Source: Petrobras's 2004 Annual Report, filed with the SEC * These figures include production from former Perez Companc assets for all of 2003, rather than just from the date of acquisition in May 2003.

 

Petrobras's production is expected to continue rising steadily between 2006 and 2009 as several new projects come onstream. Under its 2004-10 business plan currently under revision, the company has set itself a domestic oil production target of 2.3 million b/d by 2010, from its 2002 production level of 1.5 million b/d. It projects domestic consumption to reach 2.023 million b/d by 2010, which means that it could have approximately 277,000 b/d in surplus oil available for export by 2010. The volume of oil exported by Brazil could be higher depending on new production projects developed by foreign operators, but the predominance of heavy oil reserves means that light oil imports might still be required.

New Oil Production Projects in the Campos Basin Proposed by Petrobras
Field	Discovered	Platform	Production Start Up	Water Depth Range (metres)	Production Capacity (b/d)	Comments
2004-05
Barracuda	1989	P-43	Dec 2004	600-1,100	150,000	The installation of platforms P-43 and P-48 was delayed by a long-running legal dispute between Petrobras and Halliburton Co.'s subsidiary KBR.
Caratinga	1994	P-48	Feb 2005	850-1,350	150,000
Marlim	1985	P-47	July 2005	650-1,050	150,000	. .
Albacora Leste	1986	P-50	Sept 2005	1,100-1,500	180,000; 6 MMcmd of gas	Repsol-YPF has a 10% stake in the project.
Jubarte (Phase 1)	2001	P-34	Dec 2005	1,250	60,000	. .
2006-08
Espadarte	1994	RJS-409	2007	750-1,500	100,000	. .
Roncador	1996	P-52 P-54	2007 2007	1500-1,900	180,000 180,000	Development of this project was slowed by the sinking of P-36 in March 2001. Average production in 2004 was 92,200 b/d.
Marlim Sul	1987	P-51	2008	850-2,400	180,000	Production began in 2001 and averaged 179,400 b/d in 2004. P-51 will be the second production module to be installed at the field.
Marlim Leste	1987	P-53	2008	1,251	180,000	. .
Frade	1986	. .	2008	. .	100,000	The project is operated by Chevron with Petrobras as one of the partners.
Albacora Extension	1984	Under study	2008	. .	100,000	. .
After 2008
Jubarte (Phase 2)	2001	P-57	2009	. .	180,000 2 MMcmd gas	Peak production is expected in 2011.
Roncador	1996	P-55 P-56	. .	. .	. .	. .
Marlim Sul	1987	. .	. .	. .	. .	. .
Cachalote/Baleia Franca/Baleia Anã	2002/2003/2003	. .	. .	. .	. .	Heavy oil in BC-60.
Baleia Azul and other discoveries in Block BC-60	. .	. .	. .	. .	. .	. .
BC-20	. .	. .	. .	. .	. .	. .
ESS-130	. .	. .	. .	. .	. .	Light oil in BC-60.
Source: Petrobras

 

Most of Petrobras's production growth between 2005 and 2009 is expected to come from the planned addition of new production modules to fields in the Campos Basin that are already in production. Fields in the Campos Basin off the coast of the state of Rio de Janeiro, which are currently responsible for over 80% of Petrobras's total oil production, will continue to account for the bulk of new oil production. However, the state of Espírito Santo is expecting to see rapid growth in production over the coming years, after the Jubarte, Golfinho and Peroá-Cangóa (gas) projects come onstream. Indeed, Espírito Santo is set to become the second-largest producing state after Rio de Janeiro.

New Oil and Gas Production Projects Under Development or Proposed by Petrobras in Other Basins, 2005-08
Field (Block)	Basin	Anticipated Start Date	Production Capacity	Comments
Light Oil
Golfinho Pilot	Espírito Santo	August 2005	23,000 b/d	These were discovered in 2003 and have 250 million boe of reserves.
Golfinho I	Espírito Santo	2006	100,000 b/d
Golfinho II	Espírito Santo	2007	100,000 b/d
Piranema	Sergipe-Alagoas	2006	20,000 b/d	In 2004, Petrobras announced that a discovery of light oil in offshore Block SEAL-100 was commercially viable and that it intended to proceed with the field's development. The discovery, renamed Piranema, is thought to contain 76,000 barrels of reserves of good-quality oil.
BS-500	Santos	After 2008	. .	The field has natural gas and light oil (with an estimated gravity of 33° API) and is adjacent to the Mexilhão field.
Natural Gas
Manati	Camamu-Almada	2006	6 MMcmd	The field, which is located in the BCAM-40 Block in the Camamu Almada Basin off the coast of the north-eastern state of Bahia, was discovered in 2000. The project is being developed by the privately-owned Queiroz Galvão group (55%), Petrobras (operator, 35%) and Petroserv (10%). Northern Oil has also expressed an interest in buying a stake in the licence that includes the Manati field. The Manati project will allow the state of Bahia to double its current natural gas production of 6 MMcmd and become self-sufficient in gas, as well as supplying gas to other states in the region.
Peroá-Cangóa (Phase I)	Espírito Santo	July 2005	3.6 MMcmd	The fields have estimated gas reserves of 17 Bcm.
Peroá-Cangóa (Phase II)	Espírito Santo	2007	5.5 MMcmd
Mexilhão	Santos	2008	15 MMcmd	Petrobras discovered the Mexilhão field in former Block BS-400 in 2003 with estimated gas reserves of 419 Bcm. Petrobras has held talks with Repsol-YPF over a possible partnership for the development of the gas field, and there have also been reports that Shell is interested in joining the project. Other companies, including El Paso and Statoil, had been mentioned previously as possible partners in a future joint venture to develop these reserves. Petrobras hopes to bring forward the start of production at the field to 2008, one year sooner than initially anticipated.
BES-100	Espírito Santo	After 2008	. .	. .
Source: Petrobras

 

Production Outlook Beyond 2010

The prospects for sustained oil production growth for Petrobras beyond 2010 are less clear, since production at all of the large fields discovered in the Campos Basin in the 1980s and 1990s is expected to decline within the next 5-10 years. With the exception of the Jubarte-Cachalote fields, no discovery on the same scale as the earlier finds has been made in this basin in recent years. According to Petrobras's own figures, Brazil's largest field, Roncador, is set to reach peak production of 473,000 b/d by 2015. Peak production of 199,800 boe/d at the Albacora field was reached in 1998, and the Marlim field saw peak production of 586,315 b/d in 2000. Even the 'newest' Jubarte and Frade fields are expected to reach peak production in 2011. Production growth from the Campos Basin beyond 2010 will depend on the development of more recent discoveries in Block BC-60, including the Cachalote field, and on the decision of Shell and its partners as to whether to develop Block BC-10.

Although Petrobras's recent light oil and gas discoveries in the Espírito Santo, Santos and Sergipe-Alagoas Basins have raised expectations that further finds might be possible outside the Campos Basin, hopes for the discovery of new large fields in that basin diminishes.

Brazil's long-term supply outlook is also dependent on future discoveries in new basins. The only new sedimentary basin due to start production by 2010 is the Camamu-Almada Basin. According to the ANP, out of a total of 29 sedimentary basins, only eight are currently in production, and only 3% of the country's exploratory acreage is currently under concession. This is because the ANP has found it difficult to attract investment in exploration in areas designated as frontier regions such as the Jequitinhonha, Pará-Maranhão, Barreirinhas and Foz do Amazonas Basins, even though it held six annual licensing rounds to date. Despite the potential for discoveries in these areas, high exploration risks and their distance from the main markets have been disincentives to new entrants, which have shown a greater interest in basins that are already in production or have a greater potential for discoveries. At the same time, production and reserves volumes for mature onshore basins have remained fairly stable in recent years and are unlikely to produce any large discoveries that would allow them to increase their share of total production significantly. Future commercial discoveries in fr