UK supermajor Shell and Brazil’s state-owned Petrobras have agreed to collaborate on identifying new upstream business, decarbonisation opportunities and social and environmental initiatives.

The non-binding agreement focuses on potential exploration opportunities in and beyond the pre-salt, including the equatorial margin. It also contemplates energy transition efforts, with an emphasis on renewables and carbon capture, utilisation and storage.

On the environmental front, Shell and Petrobras aim to establish projects to preserve and restore biodiversity, with the goal of issuing credits to offset carbon emissions.

The companies’ respective chief executives Wael Sawan and Jean Paul Prates signed a memorandum of understanding for the agreement, which has a five-year term, on Thursday during CERAWeek by S&P Global in Houston.

Petrobras and Shell confirmed they would work together to seek potential exploration and production opportunities; and share experience and best practices on reducing carbon emissions and for social and environmental initiatives.

“Being able to rely on partners, such as Shell, is vital for Petrobras’ future plans, because partners can add their strength to areas where the company is looking for profitable diversification, such as renewables and hydrogen,” Prates said.

“We will be looking to learn from the main players as we lead Petrobras towards a fair energy transition.”

The Brazilian energy giant noted the partnership shows that both companies appreciate there are strategic synergies in E&P projects that include decarbonisation initiatives, which are important in transitioning to a low-carbon economy, and it reinforces their intention to seek new opportunities together in Brazil and elsewhere.

Committees with representatives from both companies will be set up to monitor the progress of the various studies and discussions.

The duo is already collaborating on the research and development of technology of mutual interest under a 2020 strategic technical co-operation agreement while they are partners on Brazilian assets including Mero, Atapu and Tupi.

“As Shell celebrates our 110th anniversary of working in Brazil, this exciting agreement reinforces both the significance of the country within our global portfolio, and our strong partnership with Petrobras,” Sawan commented.

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