Shell Hires Modec to Advance Major Deepwater Brazil Oil Project

Shell Plc is advancing a major offshore oil development in Brazil after hiring Modec Inc. to do engineering and design work for a floating production vessel.

The production unit, known as an FPSO, will be located about 250 kilometers (155 miles) off the coast, Modec said in a statement. Shell discovered Gato do Mato years ago but has been slow in moving forward with the development amid rising costs for equipment and services. An FPSO can cost more than $3 billion to build.

Shell continues to evaluate Gato do Mato and steps are being taken to progress toward an investment decision, the company said in a response to questions. It is re-assessing the scope of the project and the design study with Modec will further develop the scope and costs for an FPSO at the field, it said.

Brazil is a major source of oil and gas production for Shell, but primarily through partnerships with state-controlled Petroleo Brasileiro SA. Of the 466,681 barrels of oil and gas production Shell had in January, only 31,252 was from a field it operates, according to Brazil’s oil regulator. Producers like Shell generally want to control operations at some fields themselves and be minority partners in others.