Another brace of announcements from BG Group regarding its Santos Basin licences offshore of Brazil once again underlines the potential of these world-class developments. Flow rates on the Iracema appraisal well set a new record for the already-prolific discoveries in the Santos basin, joint-ventured by BG and Brazilian state oil company Petrobras. And the partners have also announced they are exploring the possibility of a floating liquefied natural gas (FLNG) unit to monetise gas from the Santos fields.
BG has always said that in addition to the valuable oil it should commence producing from the basin before the end of 2010, the quantity of associated natural gas is also very significant. To date, however, the market has refrained from seriously evaluating this gas potential, partly because of uncertainty over how and under what terms it will be monetised, and also because the most obvious solution - piped sales into the local Brazilian market - would be relatively unexciting in terms of potential profit margins.
Yet the willingness to consider a FLNG solution for the Santos Basin gas, envisioning 3m tonnes per year of LNG output, shows both that the quantity of gas is significant - LNG capacity is expensive to develop, so only the most profilic fields justify it - and also that this gas may yet find its way into the more profitable global LNG trade. That said, an LNG-led solution does not preclude sales into the Brazilian market.
