Statoil ASA (NYSE:STO) received approval from ANP (Agência Nacional do Petróleo) for the purchase of a 25% equity in a concession in Espirito Santo basin in offshore Brazil. Recent discoveries in this concession have deemed the purchase a very lucrative one and Statoil is now ready to take a share of the rich pie that is now Brazil’s petroleum industry.

Discovery in Espirito

In April 2013, an oil discovery was made at São Bernardo where two reservoirs of oil were proven with 34-36 API. The discovery is currently in the appraisal stage but has strengthened Statoil’s faith in the potential of the basin.

“The São Bernardo discovery demonstrates that the Espírito Santo basin has an exciting oil potential and further confirms the established and new geological play model in the basin,” said Tim Dodson, executive vice president for Exploration in Statoil.

Statoil acquires Espirito concession

BM-ES-22A is the concession to be acquired by Statoil ASA (NYSE:STO), which comprises two Blocks ES-M-468 and ES-M-527. Statoil is to have a 25% share in the concession while the remaining 75% is to be taken over by Petrobras. The block is located in the outer Espirito Santo basin, adjacent to another block where Statoil has a stake.

Figure 1: Map of Espirito Santo, Brazil

Statoil Gets Go-Ahead For Lucrative Espirito Santo Stake

“The strategy to enter into the BM-ES-22A concession was based on the result of the adjacent Indra discovery made in 2010. In 2012 the Arjuna well was drilled as an appraisal of the Indra discovery and proved that this accumulation extends into BM-ES-22A, from the adjacent block BM-ES-32. The well found an oil column of 200 meters, and a production test confirmed presence of a good quality reservoir with 29 API oil,” says Statoil.

Dodson explained: “With these discoveries and the 11th licencing round awards last year, Statoil ASA (NYSE:STO) has further deepened its position in this emerging oil play as we indicated at our capital market update in February. We are very well positioned for the upside.”

Future in Brazil

The Sao Bernardo discovery already has an appraisal plan that has been approved by ANP earlier this year. Statoil is supporting the development process in the basin and plans to acquire 3D seismic data on the blocks awarded to Statoil ASA (NYSE:STO) recently.

“The new licence is another building block for further value creation. We look forward to working closely together with the operator in the appraisal and further development of the asset,” elaborated André Leite, acting country manager for Statoil Brazil.