RESULTS ESTIMATE OF PRODUCTION SHARING CONTRACTS - NOV | 2019 - Pré-Sal Petróleo S.A.
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RESULTS ESTIMATE
OF PRODUCTION
SHARING CONTRACTS
NOV | 2019
SUMMARY
1 ABOUT
THE STUDY
p.03
2 PRODUCTION SHARING
CONTRACTS
p.04
3 THE PRODUCTION
SHARING REGIME
p.06
p.08
BRAZILIAN
PRE-SALT 4 PROJECT PORTFOLIO OF
PRÉ-SAL PETRÓLEO
p.10
5 CONTRACTS
DESCRIPTIONS
p.12
6
7 STUDY
METHODOLOGY
p.24
8 ESTIMATED PRODUCTION
2020 - 2032
p.26
9 GOVERNMENT SHARES
p.28
INVESTMENT
EXPECTATIONS
p.30 10 DEMANDS BY THE
p.31
INDUSTRY 11 ACKNOWLEDGMENT
p.32
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This study was conducted by Pre-Sal Petróleo, with the
collaboration of the EPBR Agency, and aims to estimate, for the
coming years, the investments and the oil and gas production,
resulting from the 17 production sharing contracts (14 in force and
three to be signed in March 2020). The study presents data up to
2032. We are aware, however, that the impact of the production
sharing regime in Brazil will be much greater than that estimated
here.
The 7th and 8th Rounds are scheduled for 2020 and 2021. During
this period, the Sepia and Atapu blocks will also be offered again in
ABOUT THE STUDY
a new Transfer of Rights Surplus Round. The results of the new
contracts will certainly increase the projection.
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The first production sharing contract was signed in October 2013
PRODUCTION SHARING
with the consortium formed by Petrobras (operator), Shell, Total,
CNPC and CNOOC for the Libra area, in the Santos Basin, as a result
of the 1st Production Sharing Round, promoted by the Brazilian
National Agency for Petroleum, Natural Gas and Biofuels (ANP)
CONTRACTS
2
Under the production sharing regime, the Federal Government
receives a share of the oil and natural gas production from each
agreement. In the case of Libra, the consortium will transfer to the
Federal Government 41.65% of the profit oil, a fraction that must
be adjusted according to well productivity and oil price.
Photo: Petrobras Agency – FPSO Pioneiro de Libra
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Also in 2013, the activities of Pré-Sal Petróleo were initiated, a
public company linked to the Ministry of Mines and Energy (MME),
which has, among its missions, the management of production
sharing contracts.
Today 14 Production Sharing Contracts (CPPs) are in force (Rounds
1 to 5). In March 2020, three other contracts will be signed,
resulting from the Transfer of Rights Surplus Round and the 6th
Production Sharing Round, which took place in November 2019.
Operations and investments are carried out by 14 oil companies,
which are part of consortia.
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The Pre-Salt Polygon and the areas considered strategic -
characterized by the low exploratory risk and high potential for
production of oil and natural gas - are exploited under the
production sharing regime. This model is used in places with great
reserves and a large oil production volume.
In Brazil, aiming at preserving the national interest, the National
Energy Policy Council (CNPE) authorizes the bidding of the areas, to
be carried out by ANP. During the bidding rounds there are disputes
for each block. In the current auction model, the bonus is fixed, and
the participating consortium members that offer the largest share of
profit oil to the Federal Government are considered the winners.
THE PRODUCTION
SHARING REGIME
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To calculate the share of the Federal Government and of the other
partners in each project, the royalties paid and all the costs required
by the operation, the so-called cost in oil, are deducted from the total
production of each field. All the surplus is shared between the Federal
Government, according to the percentage offered in the auction, and
the contracted companies.
ROYALTIES COSTS IN OIL
FEDERAL GOVERNMENT’S
SHARE*
PROFIT OIL
SHARE OF
CONTRACTORS**
*Federal Government’s Share: it varies with each
contract, depending on the oil surplus offered by the
consortium in the auction.
**Share of contractors: established according to the
participation of the partners in the consortium. 7
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THE BRAZILIAN PRE-SALT
The Pre-Salt Polygon is one of the largest oil provinces in
the world. Several discoveries of giant and supergiant fields
have been made in this area located between the Campos
and Santos Basins, in deep waters of the Brazilian
Continental Shelf.
The total depth of the deposits - distance between the
surface of the sea and the oil reservoirs below the layer of
salt - can reach up to seven thousand meters. The reservoirs
are composed of great accumulations of excellent quality oil,
with a high commercial value.
Photo: FPSO Cidade de São Paulo, Simon Townsley - Petrobras
Agency
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The average pre-salt layer production in September 2019 (latest data
available until this study was carried out) was 1.82 million barrels of oil
per day and 73.3 million cubic meters of gas per day, totaling
hydrocarbon production of 2.2 million barrels of equivalent oil per day.
That month, 110 wells produced in the Brazilian pre-salt.
In the last 60 months, based on September data, the average
production of oil from the pre-salt has grown 243%.
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PROJECT PORTFOLIO OF
The table below shows the composition of the 17 Production
Sharing Contracts. Pré-Sal Petróleo is the manager of all
PRÉ-SAL PETRÓLEO
agreements.
5
Photo: Búzios Onerous Assignment - André
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LOCATION OF THE 17 PRODUCTION SHARING CONTRACTS
Key:
Pipelines
State Boundaries
Pre-Salt Poly gon CPP
1
CPP 2
CPP 3
CPP 4
CPP 5
CPP 6
Map of Exploration and Production Areas in CPP_ECO
the Pre-Salt Polygon EXPLORATION_BLOCKS
SIRGAS2000 - November/2019 PRODUCTION_FIELDS
Production
Dev elopment
0 50 100 150 200 km
In Redeliv ery
Pre-Salt Poly gon
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MERO | ROUND 1
Consortium: Petrobras (40%)*, Total (20%), Shell UEPs
(20%), CNOOC (10%) and CNPC (10%) MERO 1 - FPSO Guanabara
Charterer: Modec
Profit Oil to the Federal Government: 41.65% 180 thousand bpd - oil
12 MMm3/d - gas
Estimated volume: 3.3 billion barrels of oil Signed agreement.
equivalent (recoverable) (oil + gas).
In December 2017 Petrobras declared the
commerciality of the Mero field, located in the
Libra exploration block area, the country's first MERO 2 - FPSO Sepetiba
pre-salt production sharing area. The area Charterer: SBM Offshore
currently produces through an Early Production 180 thousand bpd - oil
System (SPA) and estimates the installation of four 12 MMm3/d - gas
Stationary Production Units (UEP), all of them
FPSO type, with two already contracted and Letter of intent for lease
another two to be contracted. signed on June 2019.
AGREEMENT
DESCRIPTION
*Operator
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SUL DE GATO DO MATO | ROUND 2
Consortium: Shell Brasil (80%)* and Total E&P do Brasil (20%)
Profit Oil to the Federal Government: 11.53%
Sul de Gato do Mato is a continuation south of block BM-S-54, where the discovery of Gato do Mato
is located, in the Santos Basin. Shell recently launched a bid for the chartering of an FPSO, with a
capacity of 90,000 barrels per day of oil and 8.5 million of cubic meters per day of natural gas, with
spread mooring, which is expected to begin the production in the third quarter of 2023.
Shell announced in October the sale of 30% of its share in the Gato do Mato project, which includes
exploration blocks BM-S-54 and Sul de Gato do Mato, to Ecopetrol. With the operation, which has yet
to be approved by ANP and the Administrative Council for Economic Defense (CADE), Shell will
continue as operator of the project, with a 50% share.
*Operator
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NORTE DE CARCARÁ | ROUND 2
Consortium: Equinor (40%)*, Petrogal Brasil (20%) and ExxonMobil Brasil (40%)
Profit Oil to the Federal Government: 67.12%
Equinor will install two FPSO-type platforms in order to produce oil and gas in Carcará, in the
Santos Basin pre-salt. The first production unit, with a capacity of 220 thousand barrels per day of oil
and 15 million of cubic meters per day of natural gas, will be the largest in the country and should
start operating in July 2024.
The second platform, which may represent a second phase of Carcará development, is still under
study by the consortium led by Equinor.
The production system designed by the company estimates 32 wells, being 12 production wells,
four water injection wells, four gas injection wells and 12 contingency wells. Equinor already has a
drilling license for wells in the region and intends to expand the current licensing for drilling of
planned development wells.
Norte de Carcará is the extension of the exploration block BM-S-8, where the discovery of Carcará
is located.
*Operator
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ENTORNO DE SAPINHOÁ | ROUND 2
Consortium: Petrobras (45%)*, Shell Brasil (30%) and Repsol Sinopec (25%) FPSO Cidade de São Paulo
Charterer: Modec
Profit Oil to the Federal Government: 80% 120 thousand bpd - oil
5 MMm3/d - gas
First oil: January 2013
Entorno de Sapinhoá is the continuation of the Sapinhoá area declared
commercial by Petrobras in December 2011. The field, which is in the
central portion of the Santos Basin, approximately 360 km from the coast of
the state of São Paulo and 290 km from the city of Rio de Janeiro, began FPSO Cidade de Ilhabela
production in January 2013. Charterer: SBM Offshore
150 thousand barrels ppd - oil
In July 2017, Petrobras sent to ANP the declarations of commerciality of
6 MMm3/d - gas
the areas adjacent to the Sapinhoá field, in the Santos Basin pre-salt. The
First oil: November 2014
Entorno de Sapinhoá area was acquired by the same consortium in 2017, in
the 2nd Production Sharing Round. The agreement is effective since January
2018.
The ESPH’s CPP has three areas that were unitized with the Sapinhoá field.
The Production Individualization Agreement is effective since November
2018. The field is located in ultra-deep waters and currently produces 250
thousand barrels of oil per day (total of the Shared Deposit) through the
FPSOs Cidade de São Paulo and Cidade de Ilhabela.
*Operator
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PEROBA | ROUND 3 ALTO DE CABO FRIO OESTE | ROUND 3
Consortium: Petrobras (40%)*, CNODC Brasil (20%) Consortium: Shell Brasil (55%)*, CNODC Brasil (20%) and
and BP Energy (40%) QPI Brasil (25%)
Profit Oil to the Federal Government: 76.96% Profit Oil to the Federal Government: 22.87%
The Peroba block was purchased by the consortium Alto de Cabo Frio Oeste was purchased by the
Petrobras, CNODC and BP Energy in the 3rd consortium formed by Shell Brasil, CNOOC Petroleum
Production Sharing Round. The consortium offered and QPI Brasil.
76.96% of oil surplus to the Federal Government, in
order to have the area. In September 2019, Shell received from Ibama the
license to drill up to three exploration wells in the
Peroba is located on water depths of about 2,100 Alto de Cabo Frio Oeste block, in the Santos Basin
meters and about 300 km south of the city of Rio de pre-salt.
Janeiro.
In October 2019, Shell began drilling the first
wildcat well in Alto de Cabo Frio Oeste (Vidigal
prospect). The campaign is being conducted with
*Operator
Constellation's Brava Star rig, and could achieve three
wells initially.
*Operator
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ALTO DE CABO FRIO CENTRAL | ROUND 3
Consortium: Petrobras (50%)* and BP Energy (50%)
Profit Oil to the Federal Government: : 75.80%
Petrobras has begun the environmental licensing of the Alto de Cabo Frio Central exploration block
in the Campos Basin, purchased in partnership with BP in the third pre-salt auction. The consortium is
licensing six wells, with one firm well and five being conditional on the first well’s results.
The Minimum Exploratory Program of the project planned for the drilling of an exploration well.
The first well of the project will be drilled in a water depth of 2,595 meters, at a distance of 165 km
from the coast of Rio de Janeiro. The port of Rio and Cabo Frio airport will be used as the logistical
support base for the project.
*Operator
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TRÊS MARIAS | ROUND 4 UIRAPURU | ROUND 4
Consortium: Petrobras (30%)*, Chevron (30%) Consortium: Petrobras (30%)*, Petrogal Brasil (14%),
and Shell Brasil (40%) Equinor (28%) and ExxonMobil Brasil (28%)
Profit Oil to the Federal Government: 49.95% Profit Oil to the Federal Government: 75.49%
*Operator
Petrobras has begun environmental licensing in order to carry out a proprietary 4D seismic data
acquisition mega-campaign with Nodes and to implement a permanent monitoring system in the
pre-salt areas of Santos Basin.
The campaign will involve 11 pre-salt areas with a minimum coastline distance of 146km and an
operation depth between 1,300 and 2,500m: Sépia, Sapinhoá, Lula, Itaipu, Três Marias, Uirapuru,
Sagitário, Iara, Mero, Búzios and Júpiter.
A total of 17,164 km² will be surveyed, with base surveys expected to begin between 2020 and
2023 and monitoring between 2023 and 2025.
The project foresees data acquisition in the areas of Uirapuru and Três Marias, purchased in the
5th pre-salt round in partnership with Petrogal, Equinor and ExxonMobil and Chevron and Shell,
respectively.
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PAU-BRASIL | ROUND 5
Consortium: BP Energy (50%)*, Ecopetrol (20%) and CNOOC Petroleum (30%)
Profit Oil to the Federal Government: 63.79%
BP has begun environmental licensing in Ibama of up to three exploration wells in the Pau Brasil block area,
purchased by the company won at the 5th Pre-Salt Auction.
BP's goal is to start drilling the first well in August 2021. The schedule of the other wells will be defined from
the result of the first one. The exact location of the three wells will be defined after evaluation of 3D seismic
data in the area. A formation test can be performed in one of the wells if any evidence of oil and/or natural gas
is found.
The logistics bases to support the activity are not yet defined, being more likely for the offshore base a port
unit among those already existing in the municipality of Niterói, about 315 km from the block, for storage and
supply of water, diesel, drilling fluids and supplies, equipment and inputs for activities, as well as pipe cleaning
and temporary storage of waste to be generated.
*Operator
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SATURNO | ROUND 5 TITÃ | ROUND 5
Consortium: Shell Brasil (50%)* and Chevron Brasil Consortium: ExxonMobil Brasil (64%)* and
(50%) QPI Brasil (36%)
Profit Oil to the Federal Government: 70.20%
Profit Oil to the Federal Government: 23.49%
Shell initiated environmental licensing for the Saturn
block at Ibama, an area that was purchased in Round 5 ANP's board approved the Titan minimum
and which had its production sharing agreement signed exploratory program (PEM), Santos Basin pre-salt
in December 2018. The company plans to drill up to five block contracted in the 5th Sharing Round. A well
wells, the first from January 2020. The others, must be drilled by 2020, in a campaign which is part of
contingent to the first, can be drilled during 2020 and a planning that can reach up to 22 pre-salt wells.
2021.
*Operator Last year, ExxonMobil started two environmental
licensing fronts for the areas purchased in the 14th
and 15th Rounds and in the 3rd, 4th and 5th pre-salt
auctions. There are up to 22 exploration wells to be
drilled, being two firm wells, one in block C-M-789
and the other in Titan block.
*Operator
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SUDOESTE DE TARTARUGA VERDE | ROUND 5
Consortium: Petrobras (100%)*
Profit Oil to the Federal Government: 10.01%
Petrobras began production of the FPSO Cidade de Campos dos Goytacazes on June 22nd, 2018, the
same date Ibama issued the operating license for the Tartaruga Verde field platform, in the Campos
Basin post-salt (block BM-C-36). BM-C-36 is part of Petrobras' disinvestment program and is under
negotiation with Petronas.
The adjacent area of BM-C-36 was bid again in the 5th Production Sharing Round in September 2018
and is today the area of the Production Sharing Agreement of Sudoeste de Tartaruga Verde, effective
since December 2018. The Tartaruga Verde Sudoeste field has been unitized with BM-C-36 and the
Production Individualization Agreement has been effective since March 2018.
The FPSO, chartered with Modec, has been in theTartaruga Verde field since May this year. The unit
had its hull converted and modules built and integrated at the Cosco Shipyard in China. The modules
built in Brazil were integrated in the BrasFELS Shipyard, in Angra dos Reis. The platform has the capacity
to produce 150,000 barrels per day of oil and compress 5 million cubic meters per day of natural gas.
Sudoeste de Tartaruga Verde is the extension of the post-salt reserve of the Tartaruga Verde field.
*Operator
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BÚZIOS | ONEROUS ASSIGNMENT SURPLUS ROUND
Consortium: Petrobras (90%)*, CNOOC Petroleum (5%) and CNODC Brasil (5%)
Profit Oil to the Federal Government: 23.24%
Declared commercial in December 2013, the Búzios field is the main area for the onerous assignment
and has 3.058 billion barrels of recoverable oil, similar volume to what was discovered by the
consortium Petrobras, Shell, Total, CNPC and CNOOC in the Mero field, first production sharing area in
the country.
Petrobras' current business plan includes five production platforms coming into operation by 2021, of
which four are already in production. Another five platforms will be bid to be operational in the coming
years.
The first platform, the FPSO P-74, began production in April 2018. It was the first onerous assignment
project to produce oil. Also in 2018, Petrobras put the FPSOs P-75 and P-76 in operation. In 2019, the
company's last proprietary unit for the onerous assignment came into operation, the FPSO P-77.
*Operator
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ITAIPU | ONEROUS ASSIGNMENT SURPLUS ROUND ARAM | ROUND 6
Consortium: Petrobras (100%)* Consortium: Petrobras (80%)* and CNODC Brasil
(20%)
Profit Oil to the Federal Government: 18.15%
Profit Oil to the Federal Government: 29.96%
In the middle of this year, Petrobras began the contracting The consortium Petrobras and CNODC Brasil paid R$
of the FPSO to be allocated to the Itapu field, the onerous 5.05 billion in signing bonuses for the Aram area, in the
assignment area that had its surplus contracted during the Santos Basin pre-salt. ANP estimates that the area may
round conducted by ANP in November 2019. The company have 29 billion barrels of non-marked VOIP (Volume of
understands that the production unit will meet the demand Oil in Place).
for production of all the contracted volume in the field.
Thus, ANP technicians estimate that the Aram block
The FPSO Itaipu will have the capacity to produce 120,000 may be among the two or three largest pre-salt
barrels per day of oil and compress 3 million cubic meters accumulations of the Santos Basin, being among
per day of gas. The platform will have a minimum local discoveries such as the Búzios and Lula fields, both
content of 25% and the bidding for contracting its charter already pre-salt producers.
will be held in December 2019.
The prediction of the company's current Business Plan is *Operator
that the first oil will be produced in 2023.
*Operator
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METHODOLOGY
STUDY
This study includes data from the 14 production
sharing agreements under Pré-Sal Petróleo management
and the three contracts to be signed in March 2020
(Búzios, Itaipu and Aram).
7
The study adopted standard prices for oil and gas,
being US$60/barrel and US$5/MMBtu, respectively.
For first oil date and production curve, existing
Development Plans were considered. As an alternative,
the first oil was estimated for the other projects in eight
years after the signing of the agreements and production
curves were simulated, based on the volume of oil in
place, geological/commercial success rate, maximum oil
flow, ramp up time, plateau and production decline rate.
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For investments and costs, existing Development Plans
were considered. For projects in the exploratory phase
(without PD), cost assessments provided by Pré-Sal Petróleo
technical area were used. Investments were also equally
made in the three years preceding the first oil and in the year
of the first oil.
The study also includes the following variables:
depreciation rate (10%); profit oil tax rate, oil cost recovery
limit and signing bonus set for each project.
For well calculation, one production well was considered
for every 20,000 barrels of FPSO capacity. For each
production well, one injector well was considered. One
exploration well was considered per project. The use of
FPSOs with production capacity between 50,000 and 220,000
barrels/day was considered, depending on the size of the
project implemented.
The study considers the exchange rate of R$ 4.00/US$.
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By 2031, the 17 production sharing contracts will reach their
peak production, with 3.89 million barrels of oil per day. To get an
idea of this amount, total oil production in the country reached
Photo: Publicity: Pré-Sal Petróleo
2.9 million barrels per day in September 2019, according to ANP
data. The chart below shows the expected production curve for
the 17 agreements.
OIL PRODUCED UNDER SHARING REGIME (million barrels/day)
ESTIMATED PRODUCTION
2020 - 2032
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Considering the proft oil volumes offered to the Federal
Government in the 17 contracts, in 2032, the year of the Federal
Government's peak production, the projected share for the
government is 1.22 million oil barrels/day.
TOTAL PROFIT OIL (million barrels/day)
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Government shares are divided into revenues from the trade of the
Federal Government's profit oil share, royalties paid to the Federal
Government, states and municipalities and taxes paid to the federal
government.
The share of the Federal Government's oil and gas will be
commercialized by Pré-Sal Petróleo. Considering an exchange rate of
US$ 4 and the price of a barrel at US$ 60, the estimated revenue for
the Federal Government from the sale of oil is R$ 110 billion in 2032,
when Federal Government production will peak at production.
Between 2020 and 2032, the total projected revenue is R$ 424 billion.
TRADING OF THE FEDERAL GOVERNMENT OIL AND GAS SHARE (R$ billion)
GOVERNMENT
9
SHARES
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Considering the estimated revenue from the trade of Federal
Government’s oil, royalties to be paid for all agreements (R$ 349 billion)
and taxes paid to the federal government (R$ 227 billion), government
shares will reach R$ 1 trillion in the period of 2020-2032.
REVENUE WITH THE TRADING OF THE FEDERAL GOVERNMENT OIL AND GAS
(R$ billion)
ROYALTIES PROFIT OIL TAXES
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In order to develop the 17 production
sharing contracts executed between
2013 and 2019, investments of R$ 560
EXPECTATIONS
INVESTMENT
billion will be necessary
between 2020 and 2032.
The estimate is based on the entry of
the FPSOs to be contracted for the
10 Total investments
projects.
R$ 560 billion
Production platforms
R$ 196 billion
Subsea systems
R$ 168 billion
Wells
R$ 196 billion
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BY THE INDUSTRY
2500 km of subsea lines
DEMANDS
474 wells
11 28 FPSOs
ENTRY OF FPSOs INTO PRODUCTION
Photo: Jubarte - Bruno Veiga
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ACKNOWLEDGMENT
12
Study development
Strategic Planning Advisory of Pré-Sal
Petróleo, in collaboration with EPBR
Agency
Sources
Pré-Sal Petróleo
Petrobras
Brazilian National Agency for Petroleum,
Natural Gas and Biofuels (ANP)
Brazilian Institute of Oil, Gas and
Biofuels (IBP)
Ministry of Mines and Energy (MME)back to top
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