(Bloomberg) -- Brazilian regulators are cracking down on some offshore drilling by oil giants like Petrobras and Equinor ASA, complicating exploration and production projects at a key moment in the nation’s effort to boost crude output.
The drilling delays will complicate the nation’s efforts to reverse last year’s oil-production decline. Prior to 2024, Brazil had been a booming source of non-OPEC supply growth in global oil markets. Should output continue to flatline in 2025, that may signal to the OPEC+ alliance that it can begin raising exports without risking a price-killing supply glut.
Although some drilling halts resulted from serious safety issues — a Feb. 14 pump failure triggered an explosion aboard a Valaris Ltd. drillship working for Equinor — others have been suspended for seemingly minor issues that normally wouldn’t cause disruptions, according to executives who asked not to be identified discussing sensitive information.
At least three other drillships have been halted in recent months, according to some of the people. The stoppages are slowing both exploration for untapped oil fields and the drilling of auxiliary wells in older discoveries. Two Petroleos Brasileiro SA rigs were temporarily suspended as of Feb. 20, prompting the establishment of a working group to better address regulatory concerns, the state-owned oil company wrote in response to requests for comment.
The oil regulator, known as the ANP, said in response to questions that three rigs have been halted or partially halted in the past two months, adding that it only intervenes in situations of grave and imminent risk. The interventions will continue until the operators confirm that the problems have been resolved, according to the regulator.
Brazil pumped more oil than most OPEC members last year with 3.4 million barrels of daily output — enough to account for roughly 3% of global supplies.
Unplanned shutdowns and licensing delays dogged the Brazilian oil industry in 2024. The International Energy Agency, Rystad Energy AS and Wood Mackenzie Ltd. all forecast an output increase by Latin America’s biggest source of crude last year, only to be disappointed.
The increase in drilling stoppages began in December and coincided with the departure of the previous head of the ANP, according to the executives, who asked not to be named discussing non-public information. The suspensions have sent a chill through Rio de Janeiro oil circles as explorers and contractors face the prospect of a more restrictive operating environment.
One of the drillships that has been halted is the NS Carolina that is part of Ventura Offshore Holding Ltd.’s fleet of four vessels, according to some of the people. Ventura confirmed in a filing Tuesday that the drillship had an order of interdiction in January that requested improvements in certain emergency procedures, and that the company expects the interdiction to be lifted in a short time.
In the NS Carolina’s case, the ANP said that there was a failure in the execution and implementation of a gas-dispersal study that compromised the rig operator’s ability to detect leaks.
Ventura’s Oslo-traded shares fell as much as 9.5% on Tuesday to 22.40 kroner before recovering some of the losses.
To be sure, Brazil is known to have independent regulators with stricter environmental and safety standards than other regions, including the US Gulf of Mexico.
Equinor Field
The ANP has suspended work by the Valaris DS-17 drillship at Equinor’s Bacalhau field until the operator can demonstrate that it can operate safely, according to an incident report dated Feb. 17 that was reviewed by Bloomberg. A 386-pound (175-kilogram) cover blew off a pump during drilling operations, according to the report.
In a statement, Equinor said the “incident” caused no injuries or spills and will have no significant impact on operations, adding that it will clarify the reasons for the malfunction so it can resume operations. Equinor is planning to start production at Bacalhau this year and gradually ramp up to as much as much as 220,000 barrels a day during the first phase of the project.
(Updates to include response from Brazil’s oil regulator starting in fifth,10th paragraphs.)
