Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has announced that it is planning to kick off drilling activities in Brazil’s Gato do Mato block 2019.
The oil mining giant made the announcement on Monday revealing that it plans to set mining activities in motion in 2019 at the Gato do Mato mine which it acquired in an auction a month ago. Shell Brazil’s CEO, Andre Araujo pointed out that it was still too early to determine when oil will be produced from the Gato do Mato mine meaning there is currently no timeline for oil production at the mine. The company will most likely reveal more details and estimates as more preparations and measurements are made. He released the statement during a recent event held in Rio de Janeiro.
“We already drilled in the area. We know how to do it. We have the experience. So it is just about putting in place everything that we already have in order to not waste time,” Araujo told reporters during the Rio de Janeiro event.
Royal Dutch Shell won the mine at the auction together with French energy firm Total SA (ADR) (NYSE:TOT). The Gato do Mato mine is located in an off-shore block that is on a highly coveted sale layer. It is also next to a mine that both total and Shell are currently mining in partnership, though Shell has a bigger stake in both mines and is the operator. Shell managed to win roughly half of the Brazilian blocks that were on sale at the October auction. The blocks are believed to be holding more than a billion barrels of oil trapped deep below the salt rocks.
Wael Sawan, the executive VP of Shell’s deepwater unit revealed to Reuters that the mining giant was confident that it can mine the oil from the Brazilian fields and even sell it for less than $40 per barrel. Araujo also pointed out that the company is seeking out renewable energy opportunities in Brazil and that it is also seeking out partners in renewable energy.
Royal Dutch Shell stock closed the latest trading session on Monday at $63.90.