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EDITORIAL
At the moment of release of this newsletter the new regulatory framework for the pre-salt area has been approved by Congress and submitted to presidential approval, which has to take place in thirty days. If the president rejects the law or parts of it it goes back to Congress where the president’s vetoes can be made ineffective by a vote of 50% +1 of all Congressmen. Rumors indicate that the President will only veto the new rule that extends the sharing of royalkties to non-producing States of the Federation. This will be dealt with in detail in our December Newsletter.
We would like to apologize on behalf of Energy Exchange and Heller Redo Barroso & Associates for the two-month gap this newsletter and the previous one.
We hope you did not realize it because you were all too busy with new projects in our booming oil and gas industry (especially after Rio Oil & Gas 2010).
Since it has been a little while since we were last in touch, we decided to enclose to you a brief editorial comprising the major topics concerning our industry in the last months, and a small tailor-made article we published in the current edition of Scandinavian Oil and Gas Magazine.
Now that elections are over and former Lula chief of staff Dilma Roussef was elected president we expect several projects and tenders at Petrobras previously on hold to regain speed and move forward rapidly, still this year.
We do not envisage any changes in the regulatory framework and general industry directives in Dilma’s tenure as president.
Apart from the new plans for the pre-salt as approved in Congress, we believe that ANP will soon resume its bid rounds for the areas outside the pre-salt`s ring fence.
Investments in Brazil’s oil and gas sector may reach almost 400 billion reais ($240 billion) over the next four years, with the country’s pre-salt province in the forefront of the new expenditure.
Petrobras is expected to contribute 80% of the total 378 billion reais earmarked from 2011 to 2014, while the remaining 75 billion reais will come from private groups such as OGX and international players, according to a study published by Brazil’s National Development Bank.
We also envisage a fast multiplication of tenders for the construction of new transmission lines and power plants, where thermal gas-fired plants will still play a predominant role, but we will see a rapid increase of wind power generation.
As usual, we appreciate your readership and hope you enjoy our newsletter as much as we enjoy preparing it.
Heller Redo Barroso
Founding Partner
Heller Redo Barroso & Associates |
Igor Tavares
General Manager for Latin America
The Energy Exchange |
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| OUR VIEWS ON WHAT IS GOING ON AND ON THE HOT ISSUES ON WHICH EVERY COMPANY IN THE OIL AND GAS BUSINESS SHOULD BE WORKING (NOW!!) |
| Brazil’s New Commander-in-Chief |
Newly elected president Dilma Rouseef, Lula’s former chief of staff and confident, Rousseff shares much in common with outgoing Lula. She benefits from experience of practical government and has been a former energy minister. A key part of her tenure will be dedicated to the development of the deep-water oil provinces.
Rousseff will oversee a massive expansion in the country's oil sector as it prepares to bring the giant pre-salt fields on stream, developments which could make Brazil one of the world's top 10 oil exporters.
Roussef will have enormous leverage to push forward with her legislative agenda, including the final two bills designed to overhaul the country’s oil and gas regulatory framework.
The Brazilian Congress has already approved the creation of a new state-owned oil company to manage the pre-salt riches and the giant $67 billion Petrobras capitalization, which was carried out in late September.
However, the Brazilian Senate made substantial changes to the remaining two bills, which create a sovereign fund and switches the current concession model to a production sharing agreement system for blocks in the pre-salt province, meaning they will head back to the Chamber of Deputies for a new vote.
Petrobras, which will operate all upcoming pre-salt blocks with a minimum 30% stake, is also expected to undergo some changes. According to Upstream Online: “For months, there have been rumours that [Petrobras gas and energy director] Maria das Gracas Foster would become the company’s new chief executive in case Rousseff was elected, but it seems that there is a new development now, as a news report published on Wednesday has tipped her as the frontrunner to take over the role of Rousseff’s chief of staff,” the analyst added.
The Folha de S Paulo newspaper reported that Rousseff would favour Gracas Foster over former finance minister Antonio Palocci to be in charge of co-ordinating government policies, though Lula has apparently asked Rousseff to name Palocci in the position.
Current Petrobras chief executive Jose Sergio Gabrielli is expected to depart from the company in early 2011 to assume an important role in the Bahia state government. Gabrielli has ambitions to succeed re-elected governor Jaques Wagner in 2014.
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| New Regulatory Framework |
As stated in the editorial, the regulatory framework recently approved in Congress will not suffer many modifications.
Additionally, with the majority of the Lower House at PT’s alliance command, the most controversial points in the oil bill will probably be enacted, including, but not limited to: (i) Petrobras as sole operator in all pre-salt areas; (ii) Petrobras participation in all areas; and (iii) PPSA (new government company) participation and powers in the operational committees of the pre-salt blocks.
We understand that Petrobras will increase his grasp over Brazilian reserves and anyone willing to take a bite in this blue rump steak will have to abide to the Brazilian oil company requirements. In this sense, we emphasize that foreigners should focus on understanding three important issues: Petrobras Bidding procedure, Enrolment in Petrobras Vendors List and Local Content.
(i) Brief Explanation on Bidding Procedure
According to Brazilian Legislation, the bidding process is the administrative procedure through which the Public Administration call interested companies to present their proposals for offering their services or goods, contracting the most advantageous proposal amongst the companies.
For the purpose of regulating these acquisitions, the Bidding Law was enacted in 1993, providing the general rules for the bidding process and the administrative contracts executed by the Public Administration. However, the rules provided therein encumbered the procedure, jeopardizing the efficiency of several state-owned companies engaged in economic activities due to its bureaucracy.
In 1995, when Petrobras's monopoly came to an end, the Government considered that Petrobras had to become more efficient in order be competitive with the oil companies. In view of this new scenario, the Petrobras’ Simplified Bidding Procedure was created, simpler and less bureaucratic than the Bidding Law procedure, substituting the later one for any acquisition made by Petrobras.
It is important to notice that, even though the Bidding Law was substituted by the simplified bidding procedure, some provisions therein provided shall be applicable as long as the simplified bidding procedure is silent. As an example, the Simplified Bidding Procedure must attend to the principles enlisted in the Bidding Law.
(ii) Enrollment in Petrobras Vendors List
The CRCC ("Certificado de Registro no Cadastro Corporativo") is the registry required for companies willing to be included in PETROBRAS' vendor list, in which the supplier provides information about the company and specifies the products to be offered to Petrobras. Basead on the information comprised in the CRCC, PETROBRAS invites companies to participate in tenders or direct purchase negotiation of products.
In a few months, with very few exceptions, companies without CRCC enrollment will be prevented from selling or rendering services to PETROBRAS. As a matter of fact, many companies had already come to our Firm seeking advice once they were disqualified in Petrobras tenders due to the lack of CRCC registry.
Nevertheless, some of our clients, who already had CRCC enrollment, experienced problems in the renewal of their contracts just because they failed to timely update their CRCC or failed to include a particular product.
We dare to say that the CRCC enrollment is close to become a mandatory registry in Petrobras sales. As an example, other clients of our Firm, which are Petrobras' suppliers for more than 30 years, are now being pressed on a daily basis by Petrobras managers to complete their CRCC registration.
Companies are required to submit literally more than a hundred documents regarding in-depth detail of company's legal and financing standing, facilities, manufacturing processes, personnel, technical specifications of equipment, etc.
(iii) Local Content
Basically local content consists of contractual commitments, embedded in concession contracts (oil licenses, or oil lease licenses in some jurisdictions), whereby oil companies are required to procure a minimum percentage of equipment and services from local suppliers. By making such demands throughout their exploration and production projects, the country aims at fostering the development of a strong local petroleum offshore industry supply chain.
Naturally any obligation imposed on the concessionaires (license holders) will subsequently be mirrored in contracts with their suppliers and contractors. However, in practical terms, the concessionaires (remembering that Petrobras is holder over 90% of all concessions) will require varying levels of local content from its suppliers and contractors based on the specific type of activity. Technology-intensive products and services will carry a lower local content percentage rather than low-tech activities. This is obviously because Brazil still lacks an installed capacity for high-tech work in the offshore industry.
Under Brazil’s current regulatory framework, local content commitment is one of the judgment criteria applied in evaluating bidders’ offers, together with the Minimum Exploratory Program and the Signature Bonus. In presenting their offers, bidders indicate a specific percentage of local content, which is turned into a number of points used to rank bidders’ offers along with other parameters.
During bidding rounds 1 to 4 for oil concessions, there was no minimum requirement for local content commitment. The local content percentage had a cap and counted only for minor effects. Companies offered their local content commitment for both the exploration phase and the development stage, limited to the cap provided in the bidding.
In rounds 5 and 6, minimum commitment percentages were introduced. These varied depending on the blocks’ locations (onshore, shallow waters, and deep waters). In these rounds, local content gained more weight in evaluating bidders’ offers and percentages increased from the earlier 15% to 40%.
In ensuing rounds, up to the 9th and last offshore bid rounds (the 10th round auctioned only onshore blocks), the bidding indicated both minimum and maximum percentages of local content. Shallow water blocks were divided into two types (shallow water up to 100 meters, and shallow water from 100 meters up to 400 meters). In these auctions, the weight of local content was reduced to 20% of bids’ final point evaluations.
Local content policy is not expressly established in Brazil’s current Petroleum Law (Law 9.478/97.) Development of local industry is mentioned only in the section on the main principles of the national energy policy.
In the first few bidding rounds conducted by ANP, local content commitment was mainly regulated by concession contract provisions. Later, ANP established (in Ordinance 180/2003) specific rules regarding the reporting and monitoring of local content.
In Bidding Round #7, ANP introduced major changes in concession contract provisions and created a guide book for concessionaires to use in monitoring the fulfillment of local content commitments. This was due to PROMINP (Programa de Mobilização da Indústria Nacional de Petróleo e Gás Natural – Mobilization Program for the Oil and Gas National Industry), introduced in 2003 and first applied to the licenses in Bidding Round #7.
With this new scenario, Petrobras and other oil & gas players operating in Brazil will demand locally produced goods and services in increasingly larger amounts. This offers a great opportunity for local companies (even those with foreign ownership) to supply locally in the most efficient manner materials, equipment, components, and services in a shorter period of time while meeting the industry high quality standards. Of course, they must be prepared to move quickly to become enrolled on the CRCC vendors list with Petrobras.
As far as regulation is concerned, ANP established the local content certification system to be applied in concession agreements between ANP and the concessionaires. This complies with contractual requirements established since Round 7. This regulation already constitutes a set of four administrative acts. The “Local Content Certificate” is a document issued by a “certifier” that is pre-registered with ANP.
The certification is conducted according to a template made available by ANP. It states the percentage of local content of the particular good or service hired for measurement. The “Local Content Certification” involves sets of activities developed by an entity duly accredited by the ANP (regardless of commercial relationship) to publicly certify, through issuance of a certificate, that a given good or service is in compliance with the requirements established in the Regulations of Local Content Certification.
In view of the likely changes in local content commitment introduced by the proposed new Brazilian Regulatory Framework, a very sensitive point is the direct participation of the Government in managing E&P projects. According to the wording incorporated in the new proposed framework for hydrocarbons exploration in the pre-salt area, a new 100% public company (nicknamed “PPSA”) would have the right to name half of the operating committee members for all E&P projects in the pre-salt region, including the chairman, who would have a tiebreaking vote and veto powers.
Accordingly, the new public company would have control over any decision of the operating committees, including the contracting of services and goods. This would enable its representatives to require higher local content percentages -- or even to decide on contracting specific local suppliers.
Furthermore, the new regulatory framework has introduced the concept of “sole operator”: it sets forth that Petrobras will operate all pre-salt areas. Since Petrobras is essentially controlled by the Government, its officials will therefore pull the strings at Petrobras so as to make it the chief instrument for implementing national local content policy (e.g., by local content in brazilian oil industry making Petrobras’s vendor’s list – CRCC enrollment – a requirement in future biddings and contracts).
In light of recent Government statements, local content requirements will undoubtedly climb, thereby forcing interested international suppliers to establish Brazilian subsidiaries in order to participate in the massive oil revenues that will begin to flow from the pre-salt region.
As previously mentioned, in the pre-salt area, the Brazilian government has already signaled national content requirements of 85 to 95 percent for some items by the year 2020. This means that whichever player wants to have a piece of the pre-salt pie will have to establish significant local presence. In particular, equipment suppliers will likely need to build production facilities in Brazil.
Consequently, some major international major offshore contractors and suppliers are jump starting their competitive position by establishing operational and manufacturing facilities in Brazil. This is the only way these companies will be able to have contracts with Petrobras or Petrobras contractors in the near future.
Even direct association with local Brazilian companies will become insufficient in the very near future, as the lack of local content from a foreign supplier or contractor could jeopardize a project even if the company is an established subcontractor to a contractor of Petrobras.
By becoming established in Brazil, foreign companies may be directly invited to participate in auctions where high national content is required, therefore allowing it to compete with native Brazilian contractors.
But the early birds are already chasing the worms. New ports and shipyards are already under construction. Every major global shipyard is already involved in Brazil, negotiating the construction of their own yards here, all of them in association with the biggest Brazilian conglomerates. All the Korean yards are here, for example.
Despite these challenges, the Brazilian pre-salt region, also nicknamed as the “blue rump steak” due to its shape, still represents one of the best business opportunities for E&P services and goods providers throughout the world.
Companies ready to come and establish local manufacturing capacity in Brazil and strategic associations will be well-positioned for a head start in the run for black gold.
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| TECHNOLOGY |
| Developing Dry Tree Deepwater Solutions for Brazil and Global Applications |
FloaTEC, LLC, the deepwater joint venture company of Keppel FELS and McDermott International, is the only company to offer a full complement of floating production systems (FPS) including Spar, Semi, and TLP technology solutions. The past year has been one of significant activity for FloaTEC, who is currently working on two major deepwater projects, both of which will employ dry tree unit (DTU) solutions.
FloaTEC, along with its joint venture parents are working on the engineering, procurement, construction and installation (EPCI) project for theP-61 TLWP (tension leg wellhead platform) that will be set in the Papa Terra field in the Campos Basin and is owned by Petrobras and partner Chevron. The P-61 TLWP is based on the FloaTEC patented ETLP® and will be the first application of a dry tree unit (DTU) in the Brazil. It is to be installed in 1,180 meters of water.
FloaTEC also is working for Chevron for the front‐end engineering and design (FEED) of the ETLP® hull, mooring and risers for the proposed Big Foot development facility. The Big Foot field is located in the Walker Ridge Block 29 of the Gulf of Mexico and is owned by operator Chevron, and partners Statoil and Marubeni Oil & Gas. The proposed ETLP® facility will be installed in 1,581 water depth, which will be the deepest application of a tension leg platform.
Technology Development
The years of 2009 and 2010 have been a period where FloaTEC’s technology developments have matured to a point of market introduction. In March 2010, FloaTEC received “Approval in Principal” from DNV for its extendable draft semi concept, the ESemi™. FloaTEC is continuing with the ESemi™ technical qualification process. The ESemi™ design employs a single extendable heave plate below the FloaTEC DDS™ deep draft semi hull design as the means to suppress heave and enable dry tree risers and direct vertical access into the wellbore with a semisubmersible hull form.
In June 2010, FloaTEC’s Director of Technology, John Murray presented “Improved Efficiencies in Truss Spar Designs without Dry Transportation Constraints” at the OMAE 2010 conference in Shanghai, China. This presentation describes how Truss Spars that are designed to accommodate dry transportation encounter certain design constraints because the overall length and hard tank diameter of the Spar cannot exceed the limits of the transport vessel. FloaTEC has analyzed that when these constraints are removed, Spar hulls can be longer. This increased Spar hull length allows the fixed ballast and hard tank steel weights to be reduced. FloaTEC’s research has found that a deeper draft Spar has improved heave response which equates to improved global performance of dry tree risers in ultra-deep water.
Dry Tree Units for Brazil Pre-Salt Developments
FloaTEC sees the use of Dry Tree Units as a potentially superior development option for Brazil’s Pre-Salt deepwater discoveries. Eric Namtvedt, President to FloaTEC describes the offshore pre-salt discoveries in Brazil as “the new frontier for the industry” and says the P-61, TLWP platform will give Petrobras to develop a subsea field with direct vertical access into the well bore, and thus an avenue to test out this development tool in consideration for future developments in the Pre-Salt. Mr. Namtvedt says that “Wells with direct vertical access have greater reservoir recovery potential than traditional subsea wells due to the lower costs associated with well intervention and the opportunity to employ secondary recovery techniques.”
In the 2010 Pre-Salt Congress, Mr. Namtvedt presented “Pre-Salt Field Developments: A Case for Dry Tree Solutions” to the congress delegates. The key points to Mr. Namtvedt’s presentation were as follows:
• Reservoir characteristics are key in field development selection
• There are several viable development options for large fields in deepwater
• DTU drilling expense and efficiency is superior to MODU drilling
• Production facility configurations for DTUs are proven and do not require new “frontier” technology
• DTUs offer substantially more well intervention options at a much lower operating expense.
• DTUs allow for maximizing reservoir recovery
• Papa Terra will be Brazil’s first experience with a DTU
• Brazil execution for DTU projects will be proven on P-61
The conclusion of Mr. Namtvedt’s presentation was that “Dry tree solutions offer a potentially superior option for Pre-Salt field developments”.
In closing, FloaTEC sees robust market potential for Dry Tree Solutions with active areas such as Brazil, the Gulf of Mexico, the Australian Northwest Shelf and West Africa as the primary candidates for these technologies. With world energy demand expected to grow for the foreseeable future, the need to find and develop more resources is greater than ever. The offshore oil and gas industry is focusing more and more on deepwater and harsh environments for their exploration and production. FloaTEC, with its JV parent companies looks to use its global reach and local presence in the important operating areas where FPS solutions are in demand.
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| NEWS |
| ANP Confirms Major Pre-Salt Find |
The National Petroleum, Natural Gas and Biofuel Agency (ANP) confirmed the discovery of oil at sub-salt layer in pre-salt well 2-ANP-2 A-RJS in an area that belongs entirely to Federal Government.
In late October 28, financial market rumored that a pre-salt field located in the Santos Basin, still not under any concession, should be the biggest reserve in Brazil. Gaffney, Cline & Associates has reported that the Libra reserve have more volume of oil than Tupi field, which has reserves appraised between 5 and 8 billion barrels. The Libra reserves are estimated between 7.9 and 16 billion barrels.
If the appraised volume of Libra is confirmed, it will the biggest reserve in Brazil. According to the consultants’ report, the volume of recoverable oil could vary between 3.7 and 7.9 billion barrels.
The well is located at 183 kilometers of the coast of Rio de Janeiro state, in a water depth of 1,964 meters. Until now, the depth reached in this well is 5,410 meters, with 22 meters drilled under the pre-salt layer. The final depth foreseen for this well is 6,500 meters, which will be reached in early December.
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| Less Optimistic Expectation |
The Federal Government estimates that if the new regulatory framework for the oil industry is not approved by the end of November, it will be difficult to hold any National Petroleum Agency (ANP) auctions for exploration areas in the first half of next year.
That is the opinion of the Secretary of Oil and Gas Ministry of the Mines and Energy Ministry (MME), Marco Antonio Almeida. However, he was optimistic about concluding the legislative approval process after the second round of the presidential elections at the end of October.
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| OSX Bid Issue For This Year |
OSX, the shipbuilding and offshore arm of the EBX Group, reported that the tender for the construction of the first two jackets to be installed at the OGX fields in the Campos Basin would be issued before the end of this year. According to the company, the overall tender process actually will be concluded by the end of the first quarter of next year.
The company’s financial statements indicate that the conceptual project of the two platforms currently is underway, “with the tender for construction aimed to be concluded in the first quarter of 2011,” it reported. The units will be able to connect to 30 wells and dedicated rigs with the capacity to drill down to 5,000 m.
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| Santos Producing 85,000 B/D |
The Santos pre-salt region will be producing an average of between 80,000 b/d and 85,000 b/d of oil by 2011 through the Tupi pilot. The field will also produce a volume of 1.5 to 2 million m³/day of gas through two other LDTs to be installed in the cluster. Altogether, the three systems will produce some 100,000 b/d of oil by December 2011.
The Tupi Pilot, which began production on October 28th, may be producing 75,000 b/d of oil by the first semester of 2011 with the interconnection of two wells, a producer and an injector.
Initially, the FPSO Cidade de Angra dos Reis will be connected only to the RJS-660 well, as the gas outflow network has not yet been concluded and there are restraints regarding its flaring. The declaration of commerciality of Tupi is scheduled to take place through to the end of this year.
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| Guará’s LDT In November |
Petrobras will begin a Long Duration Test (LDT) in the Guará prospect, located in the BM-S-11 block of the Santos Basin pre-salt cluster, in late-November. The FPSO Dynamic Producer, now anchored in Guanabara Bay, should pass its acceptance tests soon.
Converted by the Sebawang shipyard in Singapore, the Petroserv unit will be installed in 2,140 m of water. The long-term test is scheduled to exploit the SPS-55 well and should guarantee a production of 15,000 bpd of oil.
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| Extension For Small Producers |
The Executive Board of the National Petroleum Agency (ANP) approved an one-year deadlines extension for each of the exploratory periods for blocks in mature onshore basins that were acquired during the 9th bidding round in 2007. In all, 30 areas will have their exploratory periods extended.
The decision benefits RMC, Imetame, Starfish, Construtora Pioneer, Petrosynergy, Cowan Construtora, W. Washington, Recôncavo E&P and Brasoil. Petrobras, which bought the REC-T-209 block in the competition, also benefited.
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| Shell Contracts 11 Wet Xmas Trees |
Shell has contracted FMC to supply the subsea system for Phase 2 of Parque das Conchas in the Espírito Santo portion of the Campos Basin. The contract includes 11 wet Christmas trees for 10,000 psi and two production manifolds.
FMC will also provide a manifold for artificial lift. The equipment will be manufactured at the company's plant in Rio de Janeiro and delivered during 2012. Shell intends to drill seven new wells in the Argonauta Norte field. The wells will be collected by the Espírito Santo FPSO, which has been operating in the area since 2009.
The development of Parque das Conchas will require investment of R$5.44 billion (US$ 3.3 B). Shell is the operator of the area with 50% participation and Petrobras (35%) and the Indian state company ONGC (15%) are partners. The FPSO Espírito Santo, which has the capacity to produce 100,000 b/d and to compress 3.5 million m³ per day of natural gas, is currently producing around 80.000 b/d.
The first phase of Parque das Conchas has 10 wells: six are in the Ostra field, two in Argonauta Oeste, one in Avalone, and one for gas re-injection. The volume for reinjection should reach 1.5 million m³/day in 2010.
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| Biogas To Reduc in 2011 |
The Nova Gramacho Consortium, responsible for operating the Gramacho Biogas Plant at the Jardim Gramacho Metropolitan Landfill in Duque de Caxias (Rio de Janeiro), expects to start construction next month of a 6-km pipeline that will transport the unit’s biogas production to the Reduc refinery. The plan is to start supplying 75 million m3/year to the refinery in the beginning of April 2011.
Besides the pipeline, the project calls for construction of a purification unit and separation of the gas into methane and CO2.
"The technology of the gas treatment unit has not yet been developed in Brazil and the project will be imported from the U.S.," said the director of the consortium, Eduardo Levanhagen.
According to Levanhagen the plant has the potential to sell the equivalent of 1 million tons of CO2 in carbon credits per year over the next five years.
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| US$80 Million For Ship Repairs |
Transpetro should end the year with investments of R$140 million (US$82 million) in repair work on their naval vessels. The funds are being made available for the modernization of 22 vessels, some with the conversion to double hulls.
Next year, investments will be made in ship repairs. Currently, the average ship repair time for the Petrobras subsidiary ranges between 12 to 14 days. The company is now making repairs abroad due to lack of locations in Brazil.
"We need to create facilities equipped to meet that demand," said the executive manager of Transpetro Maritime, Elizio Neto. Transpetro currently operates a fleet of 52 vessels with a transport capacity of 2.9 million tons. The vessels are 19 years old on average.
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| Aneel Approves Alternative Auctions |
Aneel authorized and adjudicated the result of the alternative sources auctions conducted on August 25 and 26. These auctions (A-3 and reserve) resulted in contracting 2,892 MW of installed power. In terms of energy output, this capacity corresponds to 1,159 MW average. Overall, 70 wind power facilities, 12 biomass-fueled thermoelectric plants, and seven small hydroelectric power plants were contracted.
The trade volume totaled R$26.9 billion (US$15.78 billion) for the terms of the contracts. The agreements are for 15 years each for biomass, 20 years for wind energy, and 30 years for small hydro plants.
Undertakings were negotiated in the states of Bahia (587,4 MW), Ceará (150 MW), Goiás (191 MW), Minas Gerais (21 MW), Mato Grosso do Sul (126 MW), Mato Grosso (20,6 MW), Paraná (19 MW), Rio Grande do Norte (1.064,6 MW), Rio Grande do Sul (245,8 MW), Santa Catarina (29,9 MW), São Paulo (356,9 MW) and Tocantins (80 MW).
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| Eletrosul Energy Purchase |
On November 8, Eletrobras Eletrosul will hold an auction to purchase electricity on the open market, for delivery between January 1 and December 31, 2011, in the South and North-Northeast submarkets.
Three products with price ceilings of R$200/MWh (US$117.50/MWh) will be negotiated. The staging of the auction will be inverted, with authorization occurring after the proposals delivery. Interested parties have until November 5th to deliver the registration documentation.
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| Green Propylene In 2013 |
In the second half of 2013, Braskem will open a new plant for producing propylene using ethanol as raw material. Construction should begin in 2011 after final approval of basic engineering studies.
An investment of around US$ 100 million is expected. Minimum production capacity would be 30,000 tons/year of green propylene. The production of each ton of ethylene removes up to 2,3 t of CO2 from the atmosphere, which is captured and fixed during the process.
The company expects the new plant to help develop its biopolymers business by expanding productive capacity and promoting the use of green plastic by the marketplace.
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| US$4 B in Investments by 2020 |
Brazil will need investments of R$7.4 billion (US$4.3 billion) by 2020 to expand the production of biodiesel fuel according to a study by the Getulio Vargas Foundation (FGV) conducted in partnership with the Brazilian Biodiesel Union (Ubrabio).
The Foundation believes that the country could reach the B10 mixture (with 10% biodiesel) level in 2014, reaching B20 in 10 years. To achieve this, an increase in installed capacity to 9.2 million m³ in biofuel production is required, up from about 5.1 million m³ available today.
In ten years, soybeans would still be the major source for biodiesel production, with a 70% overall share. It´s share, currently about 80%, will decline at 1% per year, making room for other crops such as palm, peanut, and canola oils. To increase production, the country would require an increase of about 1.5% in the soybean crop, i.e. 1.62 million ha.
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| MME Extends A-1 Deadline |
The Ministry of Mines and Energy (MME) extended the deadline for including thermoelectric power plants in the A-1 auction until November 12. The previous deadline had been November 1.
A registration form, proof of capacity for storing fuel, CVU calculations, and proof of available fuel must be delivered by interested bidders to the Energy Research Company (EPE).
The auction is scheduled for December 10 and is dedicated to selling three-year contracts for electricity supply beginning January 2011. Thermal power sources, including biomass, will be contracted either by availability or by quantity, depending on the owner of the project.
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| Rig Bids Delayed Once Again |
The opening of the three commercial envelopes containing bids by Petrobras for the construction and charter of drill rigs for 3,000 m will be postponed yet again. The oil company extended the date for submission of the installation license (IL) for the shipyards, issued by the Ibama environmental agency, to November 17. The document is required for each construction process.
The IL requirement was requested by Petrobras in September. The document was originally scheduled for delivery on November 3, but has been postponed.
Since the opening of the envelopes of the three commercial bids will be made simultaneously and Petrobras will have to evaluate and approve the installation license for the yards, it is estimated that the process will eventually extend to 2011. The best bet is that prices won´t be revealed until January or February.
The deadline extension for submitting the installation license responds to requests of participating companies, which are having difficulty obtaining the required documentation from Ibama.
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| New Efforts in Marginal Fields |
The ANP wants to negotiate the return of marginal fields owned by Petrobras before the end of the year in order to put them out for bid again. The regulatory agency expects to hold the third round of Areas with Marginal Accumulations during the first half of next year.
The agency hopes to convince the oil company to "release" fields with reserves of less than 100 million barrels in order to have the company focus on offshore mega Pre-Salt discoveries.
According to the ANP, 35 of 167 marginal fields under concession are currently in the hands of independent companies and the remaining 132 are held by Petrobras. However, Petrobras is rumored to be strongly opposed to the idea of returning the marginal areas.It claim that the fields are now used to test technologies that are then applied in large producing fields.
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| New Biodiesel Plant |
The National Petroleum Agency (ANP) authorized Camera to began producing at its first biodiesel plant, located in the municipality of Ijuí (Rio Grande do Sul). R$40 million (US$23 million) was invested in the unit, which has an authorized capacity of 400,000 l / day of biodiesel. The plant will use soybean, sunflower, and canola vegetable oil, as well as animal fat, for feedstock.
It took about 12 months to complete. The company said the plant's purposel is to expand the vertical integration of the business. Gross earnings are estimated to be approximately R$250 million (US$145 million). It is estimated that, with the transformation of grain into biodiesel, the value added generated in the soybean production chain alone will exceed R$40 million per year.
Inauguration of the plant is scheduled for November 11.
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| Itaipu-Paraguay Connection |
Bidding for construction of the transmission line to connect the capital of Paraguay to the Itaipu hydroelectric power plant (14,000 MW) was launched on October 25. Delivery of proposals and documentation will be required by December 7, at the power plant itself, located in Foz do Iguaçu (Paraná).
The Brazilian government and the Mercosul Fund for Structural Convergence and Institutional Strengthening (Focem) will be responsible for financing the project, which will cost between US$350 million and US$400 million. Operations are forecast to begin in 2012.
Currently, Brazil pays US$43.8 MWh for power from the plant, with an additional US$ 3.17/ MWh for obtaining energy that Paraguay does not use. A bill has been presented in the Brazilian Congress to review this rate, which would rise to US$9.51/MWh. This would represent an annual additional cost of US$360 million, or three times the current US$120 million.
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| Petrobras Contracts ROV Support |
Petrobras has a contracted with the Greatship/Farstad/Fugro consortium to provide support the activities of the company's ROVs. The contract´s term is five years, renewable for another five years, and will start in 2011.
The Greatship consortium will provide the Greatship Rohini and Greatship Ramya ships.
Farstad will provide the Far Scotia ship. Fugro will be responsible for the operation of operating the ROVs, and its part in the agreement accounts for around US$140 million.
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| P-57 Arriving on Location |
The P-57 platform should arrive at the Jubarte field in the Parque das Baleias complex (in the Espírito Santo portion of the Campos Basin) on October 26. According to the general manager of Petrobras’ Espírito Santo Operating Unit (UO-ES), Robério Ramos.
The P-57 required about US$1.2 billion in investments, and its timetable was strictly met. The platform’s production capacity totals 180,000 bpdo, and it can compress 2 million m³/day of natural gas. It will be installed in 1,260 m of water and will be connected to 22 wells, of which 15 are producers and seven are injectors.
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| Operating License for Tupi Pilot |
On October 22, Ibama authorized an operating license (OL) for the pilot project of the Tupi prospect, in Block BM-S-11 in the Santos Basin. The license is also valid for the oil and gas flow system.
Among the factors for the issuance of the OL, is the requirement that Petrobras implement a project to neutralize carbon emissions, thereby reducing greenhouse gases resulting from activity in Tupi. It also demanded immediate implementation of the Individual Emergency Plan.
On October 28, the oil company will start pilot production of Tupi. The Cidade de Angra dos Reis FPSO will be responsible for developing the prospect and is already anchored at the site.
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| Wärtsilä to Install Base in Rio |
Wärtsilä plans to invest R$14 million (US$8.2 million) in a new operational base in Rio de Janeiro. The plant will occupy 6,000 m² in the Caju port and will focus on the repair, maintenance, and servicing of propulsors for ships and platforms. The plant is scheduled to open in September 2011.
The project is designed to solve a logistical bottleneck for the company. It currently outsources the repair work on marine engines because of a lack of space in its existing facility unit in São Cristovão, in Rio. The company did not rule out the possibility of also using the area for engine manufacture or assembly in Brazil.
Wärtsilä is responsible for about half of the two-stroke engines installed on ships and platforms operating in Brazil today.
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| Compromise for Platforms |
The National Petroleum Agency (ANP) and Petrobras are going to sign a term of compromise establishing procedures and obligations to ensure that near-term drilling rigs and production platforms of the oil company will be in line with what is specified in Resolution 43/2007 of the Agency.
In August, the ANP provisionally suspended the operation of the P-33 Petrobras’s platform, installed in the Marlim field in the Campos Basin. The agency’s decision is in force until the safety levels required are reestablished.
Activities on the P-33 platform were suspended after an inspection of the unit, requested the emergency shutdown and verification of the risk situations on the FPSO.
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| US$1.6 B For Transmission Lines |
The transmission sector will receive investments of R$2.8 billion (US$1.65 billion) over the next three years, according to the Plan for Expansions and Reinforcement (PAR) 2011-2013, released last week by the ONS (National Operator of the System) . The funds will be invested in the construction of 31 transmission lines (2,207 km),which will increase the size of the energy grid in Brazil by 2%.
The expansion of the system includes 584 km of 500 kV transmission lines and 1,623 km of 230 kV lines. The plan also provides for 108 transformers – an increase of 8% over the current system – which will raise transforming capacity by 19,592 MVA.
In November, 735 km of lines and 11 substations will go out for bid, together with 2,097 MVA of additional transformer capacity.
The plan also projects the startup of operation of three collection stations in 2012 planned to carry the energy output from wind farms in the Northeast. The Igaporã (Bahia), Acaraú II (Ceará,) and João Camera (Rio Grande do Norte) stations will connect a total of 34 parks to the SIN (National Interconnected System).
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| Technip Supplies Papa Terra |
Tecnhip has contracted with the Petrobras/Chevron consortium to supply the Integrated Production Bundle (IPB) system for the Papa Terra field in the Campos Basin. The IPB incorporates the use of heated flexible lines, which will reduce the production start-up risk in the area.
The contract scope includes engineering services and construction and supply of 27 km of IPB, risers, and flowlines. It also provides an electrical monitoring module for the P-63 FPSO, which will be installed in the field. All equipment is expected to be delivered during 2012. Tecnhip's operational center in Rio de Janeiro will manage the contract.
The Papa Terra production system will use the P-61 TLWP and the P-63 FPSO. Petrobras' timetable calls for the first oil to be produced from the project in 2013.
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| Deepwater Discovery Heads to Yard |
Transocean’s drillship Deepwater Discovery, owned by will temporarily halt its campaign for Devon Energy in Brazil to undergo periodic inspection. The drill unit is completing a well in Block BM-C-34, in the Campos Basin, where it is gathering evidence for assessment. This should be released between late October and early November.
The inspection will be done by Transocean in the Baía da Angra. The unit is expected to be at the site by November 10. The work includes the maintenance and inspection of thrusters and inspection of the BOP and drilling equipment.
The equipment inspection will probably last about 45 days. The unit could be back in operation possibly in January or February.
Devon plans with the Drill rig start a new campaign in Campos, and will drill another well in the pre-salt region in the either BM-C-34 or BM-C-32. This is the second routine inspection that Transocean has done in Brazil. In 2009, the Deepwater Millennium went through the same process.
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| SSV Victória Arrives in Brazil |
Petroserv’s semi-submersible drilling platform, SSV Victória, has arrived in Brazil. The unit is anchored between the Pai and Mãe islands in Niterói, in the state of Rio de Janeiro. The unit, chartered by Petrobras for seven years, should begin operations before the end of the year.
Capable of drilling in waters of up to 3000 m, the drill rig was built by the Daewoo shipyard in South Korea.
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| Social Fund to be a Priority |
The government leader in the Chamber of Deputies, Candido Vaccarezza (PT-SP), said that Law 5.940/09, which set up a social fund with proceeds from the exploration of the pre-salt region, will be a priority for voting after the elections run-off.
In addition to creating the social fund, the Law establishes the sharing model for oil exploration. Members will consider the changes made by the Senate, which substantially altered the text approved by the Representatives last February. One of the changes in the proposed Law was the distribution of royalties to states and municipalities.
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| O&G Needs US$227 B in Funds |
BNDES estimates that the oil and gas sector will require investments of about R$378 billion (US$227 billion) between 2011 and 2014. Of the total amount of resources, 80% will be contributed by Petrobras - something around R$300 billion (US$180 billion) - and the balance, R$75 billion, (US$47 billion) will come from private companies.
This data was released in the Development Outlook Bulletin. The estimates by the investment bank indicate R$45 billion (US$27 billion) in the pre-salt region during the period. This numbers represent 15% of the total estimated funding for the sector between 2011 and 2014.
"The expectation, however, is that by mid-decade, investments in the region will have a greater share," the report says.
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| Petrobras Charters New Drill Rig |
Petrobras has signed a letter of intent with Prosafe to charter the semi-submersible drill rig Safe Concordia. The contract is valued at US$157 million and should begin during the second half of 2011.
The rig is currently chartered to Pemex.
Before heading to Brazil, the unit will carry out additional campaign for Chevron and another for the Mexican oil company, both in the U.S.
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| Acergy Wins Bids For Pipeline |
Acergy submitted the lowest bid for laying the shallow water portion of the Norte-Sul Capixaba gas pipeline. The company's proposal was about 10% lower than the second-handedTechnip/ Allseas consortium. The shallow water stretch will be 150 km long and 18 inches in diameter. The line will lie in waters between 40 meters and 70 meters deep.
The system will consist of two 40 km and 50 km parts 12’’ in diameter in deep water at depths between 1,100 meters and 1,500 meters. This part of the project has not yet been opened for a commercial proposal.
The pipeline will link the Camarupim field to the Parque das Baleias, in the Espirito Santo Basin.
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| Braskem Aims At African Market |
Braskem is starting to make plans to reach the African market. With an eye on demand in the Mediterranean region, the company is considering installing a petrochemical plant in Angola to process ethane and another for methanol from coal in Mozambique. The projects could possibly be implemented in the second half of this decade.
In the case of Angola, according to Roberto Ramos, vice president of the company's International Unit, the opportunity emerges because the U.S., with whom the African country has an agreement to supply natural gas, has recently begun to explore shale gas in its territory.
However, it is necessary for the country to increase its daily production of natural gas to about 40 million m³ for the company to be able to take advantage of the ethane explored. Today, production is approximately 12 million cubic meters per day.
The plans for Mozambique involve a cracker for methanol from coal with the capacity to produce between 800,000 and 1 million tons/ year. However, this still means that the company will have to have access to coal reserves in the country.
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| Brasfels To Sign FPSO Contracts |
The Brasfels Shipyard in Angra dos Reis (state of Rio de Janeiro), will sign in the next several days two turnkey type contracts for works on the integration of the FPSOs Cidade de Sao Paulo and Paraty. Contracts will be signed with the consortium Schahin/Modec and SBM/Queiroz Galvão. The hulls of the two platforms should arrive in Brazil Sometime in January or February.
Executives of companies in Brazil are negotiating the final details of the contracts. Brasfels will be busy for months with these projects. The shipyard is now working in the construction of platforms P-56 and P-61, which will be installed in the Marlim Sul and Papa Terra, the Campos Basin.
The agreement with the consortium will be set up in the same mold as the contract for the integration of the P-57, which should begin operation later in November in the Jubarte field, also in Campos. Although there was a strike lasting nearly 30 days, the unit was delivered two months ahead of schedule, with the shipyard receiving a bonus.
The FPSO Cidade de São Paulo, contracted with Schahin/Modec will head to the pilot project in the Guara prospect in the block BM-S-9 in the Santos Basin. The daily charter rate is US $ 675,000. The FPSO will be capable of producing 120,000 barrels per day and her hull is being converted in China, at the Cosco Shipyard.
SBM / Queiroz Galvao consortium is already responsible for the construction of the FPSO Cidade de Paraty, which will be installed in the Tupi Northeast pilot project, in block BM-S-11 in Santos.The conversion of the hull will be done in the Keppel Fels shipyard in Singapore.
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| UTC And EBE Win Module Bids |
UTC Engineering and SBS won the competition for the supply of 12 modules for the P-58 and P-62 platforms, with proposals totaling US$ 469 million. The platforms will be headed to the fields of Baleia Azul and Roncador, in the Campos Basin.
UTC won Lot 2 with a proposal of US$ 155.9 million, followed by GDK (US$ 173.3 million) and Techint (US$ 184 million). The package includes modules for gas dehydration, removal of CO2, water injection and sulphate removal.
Lot 3 was also won by UTC, with a bid of US$ 190.1 million, which was the only qualified proposal. The package includes three modules for processing oil.
Lot 4 was won by EBE, with a proposal of US$ 123.1 million, followed by MacLaren / ICEC (US$ 145.5 million) and GDK (US$ 151 million). The lot includes three gas compression modules, one for gas booster compression and one for chemical storage.
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| Eletrobras To Invest US$ 26 B |
Eletrobrás plans to invest more than R$ 45 billion (US$ 26 billion) by 2014. The amount is part of the investment plan that the state company is planning to disclose to the market by the end of this year. The document is an outgrowth of the Strategic Action Program (SAP) announced last year by the group.
According to the president of Eletrobrás, José Antonio Muniz Lopes, investments will encompass all areas of operation of the company. Under the SAP, the company's goal is to add 6,459 MW of installed capacity and 10,386 km of transmission lines to the Brazilian transmission system (SIN) in the next four years.
The executive said that Eletrobrás would close 2010 with investments of R$ 6 billion (US$ 3.5 billion).
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| P-56 Integration Begins |
Steps were taken this month to integrate the systems of the P-56, which is being built at the Brasfels shipyard in Angra dos Reis (Rio de Janeiro). During this stage, the hull, spider deck and deck box will be integrated. The conclusion of the stage is scheduled for February 2011.
The operation involves the movement of the 17,000-ton hull, which includes columns, pipes and machinery; the 27,000-ton deck box, including modules, processing plant and accommodations; and the 5,000-ton spider deck, related to the side and central spider sections.
The P-56 is being built by Keppel Fels, with engineering by UTC and a Technip design. The suppliers of modules for generation and compression, Rolls Royce and GE Nuovo Pignone, and the DNV classification agency also are participating in the operation. The unit will be integrated with Marlim Sul's module 2 in the Campos Basin.
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| Bonuses For Local Content |
The Ministry of Mines and Energy (MME) is considering introducing a system of rewards that increase the evaluation scores of companies that exceed the minimum requirements for local content provided in the announcement, said the Secretary of Oil, Natural Gas and Renewable Fuels of the MME, Marco Antonio de Almeida Martins. This may occur during the next round of bidding for oil exploration areas, the first under the recently elected president Dilma Rousseff’s government.
The system will also include a mechanism for companies that fail to meet these basic goals to receive a negative bonus that will count against them in future rounds.
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| Projects For Premium I & II |
Petrobras has contracted the American company UOP to supply the basic and the pre-detailing projects of the Premium I & II Refineries. The undertakings are to be built in the Northeast with a total refining capacity of 900,000 barrels per day.
The projects of the three refinery lines of 300,000 barrels per day will be similar for the two plants. The goal of the company is to reduce the cost of the project and installation and the time to complete the works. The pre-detailing projects will be carried out by Brazilian engineering companies under the supervision of UOP, contracted via an international bid.
Budgeted at R$ 33 billion (US$ 20 B), the Premium I refinery will be built in the municipality of Bacabeira, in Maranhão, with a refining capacity of 600,000 barrels per day. Inauguration of the refinery is expected for 2014. Premium II will be located in Ceará and will have a refining capacity of 300,000 barrels per day. Inauguration is expected for 2017.
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| Petrobras Issues International Call |
Petrobras plans to issue before the end of this year an international tender for chartering two or more drill rigs equipped with dynamic positioning systems, with capacity to operate in 1,500 m of water depth. The company intends to sign contracts for a minimum of two years each. The rigs must be available for operations by the end of 2011.
The exact number of units to be contracted will depend upon the daily rate presented by proposing vendors. Petrobras has guaranteed that there is sufficient demand for a minimum of two rigs.
The contracting of the new drilling units has been under study by the E&P area of the company for some time. The delay in the tender for drilling rigs with capacity to go down to 3,000 m, with the requirement that they be built in Brazil, speeded up the process.
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| ANP To Repeat Jacuípe Bidding |
The National Petroleum Agency (ANP) set December 20 for the delivery of proposals for the bidding which includes the acquisition of 2,583 km of 2D seismic reflection data for the Jacuípe Basin, located in the northern portion off the coast of Bahia. This is the second time the agency has held the competition. During the first bidding, the only bid was from Seabird, but the proposal was disqualified.
The deadline for completion of service is 360 days after signing the contract. The studies are included in the Multiyear Plan for Data Acquisition of ANP, focused on areas of new frontier.
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| Umbilicals Contracted For BC-10 |
Shell has signed a contract with Oceaneering International to supply umbilicals for Phase 2 of the Parque das Conchas project, in the Espírito Santo portion of the Campos Basin. The contract is for 30 km of umbilicals that will be manufactured at the company's facilities in Panama, Florida and Niterói (Rio de Janeiro) and delivered in 2011.
The development of Parque das Conchas required investments of R$ 5.44 billion (US$ 3.3 B). Shell is the operator of the area with 50% participation and has as partners Petrobras (35%) and the Indian state company ONGC (15%). The FPSO Espírito Santo that has the capacity to produce 100,000 bopd and to compress 3.5 million m³ per day of natural gas is today producing around 80.000 b/d.
The first phase of the Parque das Conchas has 10 wells, of which six are in the Ostra field, two in Argonauta Oeste, one in Avalone and one for gas re-injection. The volume for reinjection should reach 1.5 million m³/day in 2010.
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| Another Oil Company Opens Capital |
Queiroz Galvão Exploration and Production (QGEP) on Thursday (November 4) filed for authorization from the CVM Stock Exchange Comission to make a public offering of shares on the BM&F Bovespa Stock Exchange. The IPO will be coordinated by Itaú BBA in partnership with BTG Pactual and Bank of America Merrill Lynch.
QGEP was created after Queiroz Galvão dismantled their areas of service and E&P. The company has a portfolio of four assets for development and production, including the Manati field, and 11 exploration blocks, seven offshore and four onshore.
QGEP's decision entry the stock market is a sign of the competition among Brazilian oil companies for funding to carry out their projects. Recently, Petrobras, HRT Holdings, Norskan Karoon and Offshore Oil and Gas decided to make a public stock offering. Last week, HRT raised R$ 1.77 billion (US$ 1.05 billion).
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| Government Wants To Vote Regulatory Bills |
Three days after the leader of the government in the Chamber of Deputies Cândido Vaccarezza (PT-SP) admitted that the debate on the legislative bill to set up the share regime of the pre-salt may only take place in 2011, Alexandre Padilha, the minister of Institutional Relations, said that he will seek out the leaders of the parties to try to vote on this matter this year.
The legislative bill 5.940/09 was approved in the Chamber of Deputies in February but was substantially altered in the Senate House and therefore needs to be re-examined by the deputies.The share model should be approved before the next auction of pre-salt blocks that is expected for 2011.
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| Brand new Subsea7 |
Acergy’s shareholders approved the merger of the company with Subsea 7, as previously announced in June, 2010. The operation will be concluded in early 2011. The exchange ratio will be 1.065 Acergy shares for each Subsea7 share. In order to make this operation feasible, Acergy will also increase its capital by US$900 million.
The new Subsea7 share will be as follows: 54% Acergy and 46% Subsea7. The new company will have a market value of US$5.4 billion and projects that amounts over US$5.3 billion.
The new board of directors will be composed by four directors of each company. Among some of the already appointed directors we highlight: Kristian Siem (current Subsea7 president), Peter Mason (current Acergy president), and Mel Fitzgerald (Acergy CEO).
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| More E&P Operating Safety |
The ANP is expected within six months to update its operating safety regulations for oil exploration and production activities in the wake of the accident in the Gulf of Mexico with Transocean’s Deepwater Discovery rig while drilling BP’s Macondo well. The revelation was made by ANP office manager Luís Eduardo Duque Dutra.
“There is worldwide concern. The accident in the Gulf of Mexico was decisive. After it, everything will be different”, said Duque Dutra. There already is a dialogue going on between the agency and the oil field operators, together with service suppliers in this regard.
It was expected that in the first half of next year a new set of safety regulations for the sector would be approved. “The industry is seeking answers,” he said.
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| Exxon Retorns To BM-S-22 |
ExxonMobil, via its subsidiary Esso Brasil, will take up its exploratory works in block BM-S-22 again, in the pre-salt cluster in the Santos Basin, alongside the discoveries of Júpiter and Tupi. The oil company began the drilling campaign of the extension well 3-ESSO5-SPS that will reach a final depth of 4,574 m in a water depth of 2,272 m.
The campaign is being carried out by the drill rig West Polaris, owned by Seadrill. This is the third well drilled by the consortium in the block. Only the first well, drilled in the Azulão prospect resulted in a discovery. The second drilling made in the Guarani prospect came up dry.
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| Unitization Planned At OGX |
OGX is analyzing the possibility of the prospects of Carambola (MRK-3), in block BM-C-37, and Pipeline, in BM-C-41, having connected reservoirs. OGX has 100% of the 1st area and the second is operated by Maersk with 50% participation.
“It is possible, but still we are not certain if the accumulations are at the same level”, said Paulo Mendonça, General director of the Exploration and Production of the company.
In the next six months, the company hopes to carry out formation tests in the prospects in the Campos Basin. In the third quarter of the year, the company carried out formation tests in the wells - OGX-14 (Peró), OGX-18 (Ingá) and OGX-16 (Califônia). The oil company will begin the drilling of well OGX-25 in December.
In the Santos Basin, the company is working in four wells (OGX-17, OGX-19, OGX-23 and OGX-24). The oil company is also evaluating if the oil shows reported until now are gas and condensate or if they are gas and light oil. The plans are to drill 15 wells in the region.
In December the plan is to begin drilling in the Pará-Maranhão Basin, where the company has the concession in five blocks. At the beginning of 2011 the oil company will begin to drill in the Espírito Santo Basin, where it participates in five areas in partnership with Perenco, the operator.
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| Tupi to Receive Six FPSOs |
The Tupi prospect in the BM-S-11 block in the Santos Basin will receive six of the eight replicable FPSOs that are being built by Petrobras. The other two units will be earmarked for the Guará prospect in the BM-S-9 block, also in the Santos Basin pre-salt cluster. The forecast is that all of the units would enter into operation by 2017.
Petrobras, Galp, BG and Repsol sign contracts on Thursday (November 11) in the amount of US$ 3.46 billion with Engevix for the construction of the replicable FPSOs, which will be carried out at the Rio Grande (RS) dry dock. Each will have the capacity to produce 150,000 bopd of oil and to compress 6 million m³/day of natural gas.
Petrobras estimates that the local content index for the units will be 70% in terms of hull construction, to begin in March 2011. The first two hulls should be delivered in 2013, with the rest during the course of 2014 and 2015.
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| Rigs Will Not Be Delayed |
The president of Petrobras, José Sergio Gabrielli, denied Tuesday (November 9) that the process for the contracting of 28 drill rigs for pre-salt operations would suffer delays. The opening of bid envelopes already has been postponed on several occasions since the beginning of this year. But, according to Gabrielli, the first rig only needs to be delivered in 2017.
Gabrielli said that the decision to request approval by Ibama of the environmental licenses presented by the shipyards was designed to avoid legal uncertainties surrounding the project, in view of the fact the tender process has been the object of a number of appeals.
The government of the state of Espírito Santo already has stated it could file a lawsuit against the need for approval by the federal environmental agency. The Jurong shipyard has had problems obtaining a license from the state environmental board.
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| Aker Lands Sevan Contract |
Norwegian engineering group Aker Solutions has been awarded a contract by Sevan Marine to provide a complete 8000 feet drilling riser system for its deep-water drilling rig Sevan Brasil.
Aker said the $40 million deal included more than 100 riser joints which would be produced at its manufacturing facility in Rio das Ostras, Brazil. Aker said the contract was signed and booked as order intake in the third quarter, adding it had delivered four drilling risers packages so far this year.
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| Angola Plans in Balance |
Brazilian state-controlled oil giant Petrobras may suspend its deep-water programme in Angola, after three wildcats in the African nation turned up dry, according to sources.
The unexpectedly poor results in the first three wells have sparked a rethink and the rig will almost certainly be shifted to Brazil to help with the push to develop the pre-salt resources there. “It seems Petrobras is pretty unhappy with the outcome of its drilling activities in Angola. Shifting the rig to Brazil would make perfect sense,” said one source, speaking in condition of anonymity.
Poor results in Angola would spell another blow to Petrobras’ international division. Since the discovery of the pre-salt, the area has been slowly losing investments to a point where only $11.7 billion from the company’s mammoth $224 billion capital expenditure for the next five years are earmarked to foreign operations.
Petrobras has been present in Angola since 1979, holding exploration and production agreements in six offshore blocks. The company operates three licenses — 6/06, 18/06 and 26 — and holds minority stakes in
other three permits, including Block 15/06, where Italy’s Eni made five separate oil discoveries in the past 12 months.
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| OGX in Deal Talks |
OGX keeps making discoveries in the offshore Campos Basin where the company is seeking a partner to buy as much as a 30% stake, Mendonca said in a Bloomberg report. Mendonca did not identify the companies involved in the talks.
Campos will push OGX’s potential oil reserves above the 6.7 billion barrels oil auditing firm DeGoyler & MacNaughton calculated in a study last year, he said. Meantime, OGX has increased the number of wells it plans to drill in Brazil by 2013 to 87 from 51, a company official said today.
OGX, which has not yet started oil production, has drilled 22 wells to date throughout Brazil and has made 15 oil discoveries in the Campos Basin off the coast of Rio de Janeiro. It expects to begin production in Brazil next year.
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| Petrobras Plans To Raise $32bn By 2014 |
Brazilian state oil company Petrobras will raise $32 billion by 2014, chief executive Jose Sergio Gabrielli said today, as part of a five-year investment plan focused on developing the country's massive offshore crude reserves.
The company previously said it would borrow $40 billion during the period and $60 billion over the next five years, though Gabrielli said those figures were based on rough estimates.
Petrobras plans to invest $224 billion between now and 2014 in a massive spending drive to help Brazil tap its vast pre-salt reserves, a move which should see Brazil become a major energy exporter.
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| Sinopec Gets Set For Brazil Deep Debut |
Chinese state-run Sinopec is on the verge of making its deep-water debut in Brazil, as it plans to tap the frontier Para-Maranhao basin after the successful acquisition of a 40% stake in Repsol YPF’s new upstream subsidiary.
The drilling will be in partnership with Petrobras and will utilize the Diamond Offshore semi-submersible rig Ocean Courage, said Sinopec Brazil vice president Carlos Stenders.
The Ocean Courage is currently drilling the Barra wildcat in Sergipe-Alagoas basin Block BM-SEAL-11, where Petrobras has identified the presence of large light oil accumulations with volumes expected to top the shallow-water Guaricema and Dourado fields.
Once the well is completed, which is expected within the next few weeks, the rig will be moved north to spud Harpia.
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| Brazil Floater Hulls Work Yet To Start |
Construction on the first of eight floating production, storage and offloading vessel hulls for Brazil’s Petrobras on the Rio Grande naval pole is only due to begin in February 2011 because engineering company Engevix is still waiting for the necessary equipment before it can start work. However, the delay is not expected to hinder Petrobras’ plans to receive initial output from the first FPSO in late 2014.
Each floater will be capable of producing up to 150,000 barrels per day of light oil and compressing 6 million cubic metres per day of natural gas, as well as having crude storage capacity of 1.6 million barrels.
The units will be deployed in the Santos basin at blocks BM-S-9 and BM-S-11, home of the Tupi, Guara, Iara and Carioca finds, forming the first wave of development of the country’s pre-salt fields.
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| HRT Taps Into Market Appetite With $1.54bn IPO |
BRAZILIAN newcomer HRT Oil & Gas has raised 2.62 billion reais ($1.54 billion) in an initial public offering in the Sao Paulo Stock Exchange, indicating the market still has a strong appetite for upstream assets, following Petrobras’ huge $67 billion share offer last month,writes Fabio Palmigiani.
The company sold 2.18 million voting shares for 1200 reais each. Although the initial price came within market expectations, HRT originally planned to raise as much as 2.95 billion reais in the sale by including a secondary lot. HRT is selling stock to finance its exploration portfolio, which includes 21 blocks in the northern Solimoes basin, an area close to the Brazilian Amazon rainforest, and five offshore permits in Namibia.
HRT chief executive Marcio Mello made a bold prediction during the opening ceremony at the stock exchange. He said his goal is to transform HRT into the largest private oil company in Brazil in the next five years, surpassing even OGX, founded by mining tycoon Eike Batista.
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| Aker Solutions Scoops Brazil Pre-Salt Deal |
Norway’s Aker Solutions has signed a frame agreement with Brazilian giant Petrobras to supply 40 subsea trees destined for the Iara and Guara fields, in the pre-salt Santos basin.
The contract is worth about $300 million. The workscope includes engineering and manufacturing of 40 vertical subsea trees for water depths of 2500 metres, subsea control systems and 17 complete tool sets. Delivery will take place over the next four years, Aker Solutions said.
The work will be managed, engineered and carried out by the company’s manufacturing facility in Curitiba, Brazil, with the Aberdeen office providing support for the subsea control systems. Delivery of the first subsea tree is scheduled for the end of next year.
With this latest deal, Aker Solutions will provide subsea production equipment for all the three initial field developments in the Brazilian pre-salt area.
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| Petrobras Puts a Six-Pack On Menu |
Petrobras has launched a tender to contract up to six new pipelaying construction vessels (PLCVs) in an attempt to expand its fleet, as the Brazilian oil giant tries to obtain critical resources that will make possible the develop ment push into the emerging pre-salt province.
Details of the tender, which was opened last Friday, were scarce as Upstream went to press, but it is understood that Petrobras has invited between five and six international contractors, including Technip, Saipem, McDermott International and Subsea 7, according to sources.
With several contracts for flexible pipelaying vessels up for renewal, Petrobras is going to the market looking for more favorable rates, but the company is also keen on bringing in more newbuild units.
One source said Petrobras is giving contractors the option to build up to two of the six PLCVs abroad, while at least four units must be manufactured in Brazil to adhere to the country’s local content requirements.
Petrobras expects to receive the commercial proposals by the end of the year and make a final investment decision in early 2011. Technip has a possible advantage in that project, because the French contractor worked on a twin-reeled hybrid vessel with STX Heavy Industries in China this year.
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| Setal In Partner Hunt For Shipyard At Sao Jose Do Norte |
Brazil’s Setal group is seeking an international partner to help build a major shipyard at Sao Jose do Norte in southern Brazil, writes Garweth Chetwynd. Setal has been talking to Indian, South Korean and European suitors in the search for an international shipyard partner, offering a stake of up to 50%. A decision is expected before the end of the year.
The proposed site is close to Rio Grande, where a Petrobras-brokered drydock project was recently concluded and where Sao Paulo construction outfit Engevix is in line to build eight hulls for the Tupi field. Setal has chosen the less developed neighbouring town of Sao Jose do Norte for its yard, which will be built inside the Lago dos Patos lagoon.
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| Temasek Pumps $400m In Odebrecht |
Brazilian engineering player Odebrecht said its oil and gas division has received a $400 million investment from Singapore state investor Temasek.
That division plans to invest $3.5 billion over the next three years to tap into Brazil's booming oil services market, which is slated for expansion as the country taps deep-water oil reserves off its coast.
It has received orders to build five rigs for state-owned giant Petrobras, which hopes to buy most of its offshore equipment from domestic suppliers in order to support the naval industry and boost the domestic economy, Reuters reported.
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| Technip In Swim At Papa Terra |
French player Technip has been awarded a subsea contract by the Petrobras-led joint venture at the Papa Terra field in the Campos basin, offshore Brazil. Technip said the contract included the engineering, procurement, manufacturing and supply of 27 kilometers of integrated production bundle (IPB) risers and flowlines.
It added the IPB technology would be used in the heavy oil Papa-Terra field to increase the temperature of the produced fluid after long shut downs in order to reduce its viscosity, enabling well production restart.
The company will also supply an electrical and monitoring module to be installed on the P-63 floating production, storage and offloading unit. The work will be carried out at Technip’s operating center in Rio de Janeiro and the delivery of the modules and the IPBs are scheduled for delivery during 2012.
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| Jurong In Deal For FPSO Job |
Singapore’s Jurong Shipyard has struck a deal with Teekay Petrojarl for the conversion of the Aframax oil tanker MT Arc II into a floating production, storage and offloading vessel, destined for the Tiro-Sidon light oil development off Brazil, writes Fabio Palmigiani.
The conversion contract, worth about S$351 million ($269.5 million), also includes the detailed engineering, installation and integration of 16 topside modules, as well as the installation of spread mooring and power generation systems.The FPSO is scheduled for delivery in the first quarter of 2012 and will be renamed Petrojarl Cidade de Itajai.
The unit will be installed in water depths of 277 metres in the southern portion of the Santos basin and will have a production capacity of at least 80,000 barrels per day of oil and 70 million cubic feet per day of gas.
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| Floater Giants Face Off For Osx Vessel |
Leading floater rivals SBM Offshore and Modec International will battle it out to supply a floating production, storage and offloading unit for OSX, the shipbuilding and offshore services division of Brazil’s EBX group.
The duo submitted bids in a tender that is geared toward supplying a second such unit for OSX’s group stablemate OGX, Brazil’s fastest-growing oil and gas company. Commercial offers are due to be submitted in the first week of November.
OSX bid procedures required a range of prices, offering comparisons for chartered or wholly acquired units and also pricing options for meeting 65% local content and for not doing so.
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| OGX Lending a Hand To Perenco |
Brazilian independent OGX is set to sub-lease one of six semi-submersible drilling rigs on its books to Perenco, allowing its consortium partner to start a deep-water campaign in Brazil’s Espirito Santo basin next year.
Perenco was awarded five Espirito Santos exploration licences in 2007, after taking part in Brazil’’s ninth oil and gas licensing round. OGX holds a 50% non-operating interest in all five of them. However, Perenco applied for environmental permits for the drilling campaign in late 2009 and the French company is hoping for an earlier start.
The partners are expected to make a decision about moving to a second phase of exploration by March 2012. Doing so would require at least one well on all five blocks. It is understood that the other three blocks, BM-ES-39, BM-ES-40 and BM-ES-41 are likely to include some pre-salt targets. Water depths extend beyond 2000 metres on two of these.
Two additional probes are already being eyed for the second half of next year and four more throughout 2012, a consortium source said.
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| Petrobras Pockets $67bn In Offering |
BRAZIL’S Petrobras has taken a step toward joining the ranks of the supermajors by completing a $67 billion share offering. The offering dispelled medium-term worries about Petrobras’ ability to fund at least the first phase in its $224 billion five-year investment plan.
However, minority shareholders and Brazilian citizens were all entitled to ask questions about the true value of the huge transaction. Equity analysts and minority shareholders were left wondering about creeping government interference and future financing strategies for the state-controlled company. About $25 billion of the funds will immediately be available to help fund the Petrobras business plan.
The remainder is in Treasury notes tied to the oil-for-shares deal that gave Petrobras explor-ation and production rights to 5 billion barrels of crude on a pre-salt play lying on open acreage but immediately on trend with fields such as Iara. In line with policy objectives, the Brazilian government increased its total equity in the company from 39.2% to 47.3%, including participation by state-owned banks and Brazil’s sovereign wealth fund.
The uncertainties surrounding the price per barrel that Petrobras would pay for the government’s crude for oil deal and the secretive manoeuvring to augment government control put many investors to flight, wiping a third of the value of Petrobras stock over the course of the year.
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| Sources: Reuters, Energia Hoje, Brazil Energy, TB Petroleum, OGlobo, Upstreamonline, Rigzone, Bloomberg, Petrobras Agency, |
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