Gato do Mato lies in the prolific pre-salt area of the Santos Basin in water depths ranging from 1,750 to 2,050 meters. It consists of the BM-S-54 concession, awarded by the National Petroleum Agency (ANP) regulator to Shell in 2005, and Sul de Gato do Mato, a production sharing agreement obtained in 2017 by a consortium consisting of Shell as operator on 80% and Total (now called TotalEnergies) on 20%. The field was discovered in 2010, representing a lengthy lead time between discovery and development. After a hiatus of nine years, the field was finally appraised in 2019 and 2020. Shell also farmed out a 30% interest in the Gato do Mato project pre-salt gas-condensate discovery covering two neighboring blocks, BM-S-54 and Sul de Gato do Mato, to Colombian state player Ecopetrol in 2019. Upon completion, Shell’s interest was reduced to 50%, along with Ecopetrol at 30%, with TotalEnergies holding the remaining 20%.

Gato do Mato was initially planned to be approved in 2022 but was delayed due to cost escalations. The recently approved development plan includes the installation of an FPSO with production capacity of up to 120,000 bpd of oil by drilling 12 development wells, including five oil producers, four gas injectors and two water injectors, plus a spare slot. The field development is likely to cost around $3.2 billion to $3.4 billion, as per Rystad Energy estimates. Gato do Mato is also the first offshore project to be sanctioned in Brazil after 2023 by companies outside of state giant Petrobras as an operator. International operators, along with other regional independents, have now approved about $22 billion in greenfield capital expenditure for Brazilian offshore projects approved since 2019.

Gato do Mato is expected to begin producing by 2029 and will ramp up to peak production of about 100,000 bpd of oil by the beginning of the next decade, cementing the role of Brazil in Shell’s gross liquids production. The project development adds to the fleet of FPSO developments in the South American country, while also contributing towards the country’s liquids supply, a crucial contributor of non-OPEC offshore liquids supply growth. The produced gas will initially be reinjected to maintain reservoir pressure support, and Shell may collaborate with other operators, with an option to export gas to onshore facilities.

Brazil is one of Shell’s most significant areas of operation and a key contributor to the company’s total liquids production. The development of Gato do Mato, along with some other project approvals towards the end of the decade, is likely to propel Brazil’s contribution towards Shell’s liquids production from about 18% in 2020 to 23% in 2035. This would see Brazil maintaining pole position in the major’s portfolio since it replaced the US in 2023, with the liquids contribution from the US likely to decline from slightly over 25% in 2020 to 9% by 2035, as shown in Figure 4 below.

The development of new projects not only adds to the company’s production but also aids in sustaining Brazil’s liquids (crude/condensate) production and progress towards the targeted 5 million bpd. Nonetheless, Brazil may fall short and is likely to see a decline in production towards the second half of this decade, primarily driven by declining pre-salt production and a lack of major exploratory success at pre-salt prospects in recent years. This calls for continued investment and a ramp-up in exploration activity to unearth substantial volumes to be developed.

Authors: 

Palzor Shenga

Vice President, Upstream Research
palzor.shenga@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)