Petróleo Brasileiro SA and Norway’s Statoil ASA are expanding a partnership to help the Brazilian state-controlled company arrest declining production at aging wells in the offshore Campos Basin, two people with direct knowledge of the plan said.

In late August, Petrobras and Statoil signed a memorandum of understanding that has since evolved to targeting aging wells. Both companies are discussing under which terms Statoil could get stakes in some fields in exchange for fresh investment and technological cooperation, the people said.

Press representatives for Petrobras did not have a comment. The sources asked not to be identified because the talks remain private.

In an emailed statement to Reuters, Oslo-based Statoil said that following the signature of the memorandum, both companies moved to set up groups to work on cooperation areas. But it is too early to elaborate on the evolution of the ongoing works, it said.

Preferred shares in Petrobras closed 0.4 percent higher at 14.02 reais on the São Paulo Stock Exchange on Tuesday. Statoil closed up 1.1 percent at 135.5 Norwegian crowns.

The decision underscores steps by Petrobras’ chief executive, Pedro Parente, to rationalize capital spending and cope with low oil prices and a sweeping corruption scandal involving the company.

The Campos Basin, which was responsible for about 85 percent of Brazil’s oil output five years ago, now accounts for 58 percent. Petrobras produces about 80 percent of Brazil’s oil and is responsible for developing massive offshore oil finds in a region known as the Subsalt Polygon.

Statoil two months ago agreed to pay $2.5 billion for a 66 percent stake in Carcará, one of Petrobras’ largest oil and gas prospects. Recently, the companies signed a deal in which they said would collaborate on existing fields in Brazil’s Campos and Santos Basins.

BUSINESS PLAN

The Subsalt Polygon is near the coast of Rio de Janeiro, where several of the world’s largest recent oil discoveries have been made.

Last month, Petrobras cut planned investments for the 2017-2021 period by 25 percent in a drive to reduce its $130 billion debt burden and revive investor confidence battered by years of over-spending.

Capital spending plans for existing Campos Basin wells suffered the most with the cuts, one of the people said.

The 2017-2021 business plan lowered the estimate for the rate of decline of production in the Campos Basin to 9 percent a year. Petrobras previously estimated a decline between 12 and 15 percent.

The plan included the need for production partnerships in the Campos Basin, especially to revive output in the basin’s Marlim field.

Source: www.offshoreenergytoday.com