The Norwegian oil company Equinor and its US-based partner ExxonMobil are moving toward a decision on an $8bn upstream expansion project in Brazil, according to a Reuters report.

Equinor informed Reuters last week that the two companies were looking to boost production levels at the Bacalhau oilfield, located in the pre-salt section of the Santos basin off the coast of Brazil. With reserves in excess of 1bn barrels, Bacalhau is Equinor’s largest project outside Norway. ExxonMobil also sees the field as a growth opportunity, as this project will allow it to produce its first barrel of oil offshore Brazil while also opening up a new and lower-carbon source of oil supplies.

ExxonMobil and Equinor will use an existing floating production, storage and off-loading (FPSO) vessel that has already been installed at Bacalhau for production to launch the Phase 1 project. That FPSO has a production capacity of 220,000 barrels per day (bpd) and is due to begin production within the framework of this project in 2024.

Phase 2 of the expansion scheme is likely to include the installation of a second drilling rig at the field, as well as a second FPSO, three sources close to the discussions informed Reuters. It may also entail the construction of a 100-mile (160-km) gas pipeline, the sources said.

ExxonMobil and Equinor did not confirm the sources’ statements, but an Equinor spokesperson said that the company was assessing a contract award for the second drilling rig and that pre-drilling work at the Phase 1 expansion wells was scheduled to begin in the third quarter of this year.

The Norwegian company also said there were plans in place to drill a new appraisal well in the northern section of the Bacalhau field in order “to better understand the reserves base for the Phase 2 development.”

If the first phase of expansion proves to be successful, the companies may decide to double investment in the project during the second phase, one of Reuters’ sources said. Equinor’s spokesperson did not comment directly on this statement but said the deciding factor would be whether or not the field could produce enough oil to justify the implementation of a second FPSO as well as a gas pipeline to transport the output to shore.

Bacalhau is the first oilfield in Brazil not to be developed by state-owned Petrobras. ExxonMobil owns a 40% stake in the field, while Equinor has 40% and serves as operator. Petrogal Brasil holds the remaining 20% of equity.

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