PPSA´s roles and activities in the Brazilian pre-salt Approach to Norwegian Institutions and Industry Rio de Janeiro, 12/08/15 Edson Nakagawa Pré-Sal Petróleo S. A. (PPSA)
Outline • The Brazilian pre-salt and its regulatory regimes • PPSA’s roles and current activities • Research, technology and innovation opportunities • Closing remarks
The Brazilian pre-salt and its regulatory regimes
2000 - 2nd ANP Bid Round in the pre-salt Expected ~US$ 100 billion investment until 2019* 2005 - 1st discovery in Santos Basin pre-salt 100% exploratory success in the pre-salt area in 2013* 2006 – Oil discovery confirmed in Tupi prospect 2007 – Announcement of huge pre-salt resources 2008 – 1st oil in Campos Basin pre-salt (Jubarte) Pre-Salt Polygon 2009 – 1st oil produced in Santos Basin pre-salt (Lula) Campos Basin Santos Basin 2010 – Pre-salt Production Sharing Regime and PPSA 2011 - Oil discovery in Libra Prospect 896 Kboe/day reached in May/2015** 2013, August – Founding of PPSA 11 production units and 49 2013, November – 1st PSA production wells ** Bid Round in the pre-salt area 2014, June – Petrobras granted the surplus of the *Source: Petrobras **Source: ANP transfer of rights area
Regulatory Regimes Governing E&P Activities In Brazil Regime of Transfer Production Sharing Concession Regime of Rights to Regime Petrobras • 1997 - Law 9.478 • 2010 - Law 12.276 • 2010 - Law 12.304 and Law 12.351 • Bid rounds for • Licenses granted licensing directly to • For areas not PETROBRAS granted to • No mandatory state concession in the participation • Capitalization of Pre-Salt Polygon PETROBRAS with • Oil production direct transfer of belongs to rights to produce 5 concessionaires billion barrels of O&G
Pre-Salt Polygon Area: 149,000 Km2 Concession Area: 42,000 Km2 (28%) Transfer of Rights Campos Basin Area: 3,740 Km2 (2.5%) Estimated Volume in Place Production Sharing (Sep 2014) Regime – Libra: 200 billion boe 1,548 Km2 (1%) Estimated Reserves (Sep 2014) 37-46 billion boe Santos Basin
Production Sharing Regime Production Sharing Agreement (PSA) License granted to a License granted directly to consortium through bid Petrobras round • PETROBRAS: sole operator with at least 30% participation • Non-operators: consortium partners • PPSA: consortium member representing the State’s interests in the PSA • ANP: manages the bid rounds and regulate the PSA
Production Shares in the PSA Social Fund (Education and Health) Royalties $ Hydrocarbons Profit Oil Total Production State Share of Cost Oil Profit Oil
PPSA´s roles and current activities
Pré-Sal Petróleo S. A. (PPSA) Roles Main Assignments in PSA’s Management of: • Production Sharing Consortium Operational Committee • Agreements; and Chair with 50% vote and veto Commercialization power Agreements E&P plans and execution • Management and audit Representation of the State in • Technical and economic analysis Unitization Agreements CAPEX & OPEX monitoring and audit Goal Sanction of qualified expenditures (cost oil recovery) Maximization of the economic • results of: Local Content • Targets accomplishment PSA’s; and assurance Commercialization of the State O&G
First PSA: Libra Major Challenge: Fast-track development vs. Local Content requirements Bid Round in Oct 21, 2013 Oil Discovery: Well 2-ANP-2A – RJS Signature Bonus: R$ 15 billion API 27o; GOR 410-450 m³ /m³; CO2 40-42% Winner Consortium: High productivity: 3667 bopd (choke 32/64 ” ) Petrobras (Operator) .... 40% Shell Brazil ..................... 20% Estimated Resources: 8 to 12 billion boe(*) Total Brazil ..................... 20% (*) Source: ANP CNODC Brazil ................. 10% CNOOC Brazil ................. 10% Signing of PSA: Dec 02, 2013 Government Share in Profit Oil: 41.65% (for US$ 100/bbl and 12,000 bbl/day) Percentage of Cost Recovery: 50% in the first two years and 30% thereafter
Transfer of Rights to Petrobras PSA’s directly granted to (Contracted volumes in 2010) Petrobras for surplus volumes Areas Volumes Areas Surplus Volumes Billion boe Billion boe (*) Buzios 3.058 Buzios (Franco) 6.5 to 10.0 Iara Surrounding 0.600 Iara Surrounding 2.5 to 4.0 Florim 0.467 Itapu (Florim) 0.3 to 0.5 NE Tupi 0.428 Sépia (NE Tupi) 0.5 to 0.7 S Lula 0.128 Total 9.8 to 15.2 S Guara 0.319 Signature bonus: R$ 2 billion o Total 5.000 35 years contract o (*) ANP estimate Additional Information Very large potential o resources with low risk Several wells already o drilled in the four areas totaling 2,046 km² Allows for project optimization Declaration of o Avoids juridical uncertainties Commerciality already More than double reserves under PSA’s submitted agreements (18-26 billion boe) Pending PSA, depending o on renegotiation of Transfer of Rights terms
Representing the State in Unitization Agreements o Santos Basin: Cases of petroleum discoveries where o Lula & Sul de reservoirs extend over non-contracted areas Lula in the Pre-Salt Polygon o Sapinhoá o Sul de Sapinhoá Unitization Agreements will allow for o Gato do Mato monetization of the State’s O&G sooner than PSA’s o Carcará o Epitonium o Campos Basin: o Tartaruga Mestiça o Pirambu o Carapeba o Nautilus o Caxaréu o BMC-32
Commercialization of the State´s Petroleum and Natural Gas State´s Petroleum and Natural Gas PPSA shall not commercialize • directly or indirectly the State’s PPSA Trading Final O&G but shall manage the (State) Agent Buyer commercialization contract with a trading agent, and monitor and audit the operations $$$ PPSA transfers title of the State´s • petroleum and natural gas Social directly to the final buyer Fund Trading agent role PPSA role Trade the oil & gas Contract the trading agent Manage the commercialization agreement with Provide documents and certificates necessary for the trading agent lifting Monitor and audit trading agent decisions Evaluate credit lines Control the State volumes and lifting procedures Provide lifting vessel as required Deposit the income on social fund Provide transshipment Evaluate the performance of the trading agent Provide transport vessel in case of CIF sales
Research, technology and innovation opportunities
Research, Technology and Innovation Levy in the PSA Up to 0.4% investment on Consortium Partner own Not entitled for Research Lines cost oil recovery Minimum 0.1% investment with Brazilian Companies Entitled for cost oil recovery Minimum 0.5% investment Must be aligned to Tech-Sci with Universities and Comm. priorities Research Institutions 1% of Yearly O&G Production Gross Revenues
Libra´s Scenario - Major Innovation & Science Opportunities Science Reservoir Thick Opportunities Imaging and EOR, Carbonate Continuous IOR Reservoirs Phys. & Monitoring Chem. Proc. Sensing IT & Comm. Tech. Libra´s High Deep- Materials & Production Corrosion water Pre-salt Wells Drilling, Riser Completions Systems Field & Large Architecture Flow Intervention Volumes of Assurance Costs Associated Subsea Surface Gas Gas Systems Facilities Processing
Technology Opportunities: Pre-salt Gas Utilization Total Gas Technical /economical (HC+CO 2 ) feasibility of the pre-salt gas Reinjection utilization is of crucial Gas To Wire for EOR relevance to the State CO 2 (GTW) Separation & Floating Power Plant with Injection + HVDC lines to HC Gas export shore Libra´s Associated Gas Oil: 8-12 Bbbl; Gas (inc. CO 2 ): 560-840 Total Export Compressed BNm 3 ; Gas Pipeline Natural Gas GOR: 440 m 3 /m 3 w/ 44% CO 2 (Onshore (CNG) processing) Previsão de Produção de Gás Associado da União 30 Vazão de Gás Associado (10 6 m 3 /d) 25 100 USD/bbl 20 80 USD/bbl 15 Gas To Liquids 10 Floating LNG 5 (GTL) 0 Ano
Closing remarks
Closing remarks • Current industry drivers • Local Content challenge C onciliation of fast-track • Cost reduction • development with high local • Productivity gains content requirements in a tight • Higher recovery rates supply chain market • Associated gas • Research, technology and monetization innovation will play a crucial • Ramp up of PPSA ´ s activities role in the long-term impact of the pre-salt development • Libra Opportunities for R&D • • 12 unitization processes collaboration with Libra’s • Commercialization modeling partners
Thank you! Edson Nakagawa Pré-Sal Petróleo S. A. – Technical and Audit Director edson.nakagawa@ppsa.gov.br
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