Making the most of Brazil’s pre-salt resources

Do you see demand in the commercialisation stage from players other than Petrobras?
In 2018, we started the commercialisation process of oil and gas for the union. We have already sold three cargoes from Mero and now we have been talking to our stakeholder to develop solutions for becoming an export player.
Brazil has logistics problems. The country is not a petroleum export hub such as the Middle East or West Africa. In Brazil, a small part is exported, and this export activity is confined to a few companies. The major petroleum companies have the adequate logistics structure, but the smaller companies have logistics difficulties. In the end, the logistics structure must come from the buyers. We are also studying logistics alternatives to deliver our production.

What are the production projections for pre-salt reserves compared to others in the country?
Pre-salt production is increasing while post-salt production is decreasing. This is natural because there are massive investments in pre-salt and not as many in post-salt. This trend will continue. Brazilian pre-salt, despite its short history, is one of the largest opportunities in the world. This is a unique exploration province, not only in terms of gas production potential, but also for petroleum.
Pre-salt wells produce 16,000 bopd on average. There are wells that produce more than 40,000 bopd. Out of the 70-plus wells, 50% produce at least 25,000 bopd. Even Petrobras was not prepared for well production of this magnitude. As a comparison, another Brazilian producing area is the Recôncavo Baiano onshore and offshore. There, we have 1,500 wells, each of which produces an average of 26 barrels. If you multiply 26 by 1,500, the result does not reach the pre-salt production potential.

How attractive is it for foreign investors to come to Brazil?
Repetro was renewed for another 20 years, although there has been ongoing litigation concerning Repetro in the state of Rio de Janeiro as of summer 2018. I believe this will be overcome. The states of São Paulo and Espírito Santo have presented themselves as in favour of Repetro, and if the state of Rio de Janeiro is not in favour, it will lose its competitiveness. Investors in Rio can migrate to other states. The government of Rio de Janeiro is working on this.
Oil companies invest in countries where social conditions are significantly more adverse than in Brazil. It must be said that Brazil, in this regard, is a paradise from the legislative point of view. Brazil has a history of keeping contracts. Despite all the government changes that we have had in the 20 years since the opening of the petroleum industry, the contracts granted in bidding round zero are still operative; they are respected.
The government has evaluated the models and made the necessary arrangements according to the requirements of the industry as a whole. The production-sharing agreement, for example, has been adjusted regarding local content, according to Petrobras’ obligation in its operation in the pre-salt, based on learned lessons and keeping in mind the national and international scenario.
The country wants to be competitive and is looking for ways to be more competitive, to make things better.

Could you tell us about PPSA and its main responsibilities in the pre-salt polygon?
Established in November, 2013, Pre-Sal Petróleo operates on three major fronts: managing production-sharing contracts, managing oil and natural gas commercial activities and representing the union on unitisation agreements.
Pre-Sal Petróleo is a forward-looking company with a first-class collaborative staff. Its institutional task is to mobilise all its expertise and management capacity to provide the union with the best results in terms of pre-salt exploration and production.
The revenues are intended for the noble purposes specified in the law through the social fund, and for application in education and health. The pre-salt gives Brazil the chance of becoming an even richer country.
Up until the end of 2017, we were handling only one production-sharing agreement. With the second and third pre-salt bidding rounds, another six contracts were granted. On the subject of unitisation agreements, we have four contracts signed and several studies in areas with potential for unitisation agreements to be signed.

How has the Brazilian supply chain gained in global competitiveness?
Brazil has a developed supply chain for the oil and gas industry. There is a large number of national companies and a lot of startups developing and providing services in the operational phase in all exploration and production projects. We are working towards technological development. Our industrial park is very large, and we see companies working together with universities to develop technological projects – backed by the rules of the ANP – providing very positive results.
The Brazilian companies are very competitive in the area of submarine installations and at the leading edge, globally. Companies from other countries have benefited from Brazilian subsea expertise.

Do you see enough activity in terms of gas infrastructure investments in Brazil?
I do not see much work in this sense yet. There are many studies being developed about alternative paths, such as the construction of new pipelines, but these matters will be consolidated in the long term, once new fields with large reserves of gas such as Carcará consolidate as production development projects.
Either producers will make these investments, or they will stimulate other companies to make these investments. In the short term, one must base business on existing structures and projects being materialised right now.
Onshore, the decentralisation of gas infrastructure is happening. Petrobras has sold one part, NTS [Nova Transportadora do Sudeste], and is trying to sell the other. This can be positive, because the market is interested in it and specialised companies are eager to buy existing infrastructure. Whether these companies will increase infrastructure investments will depend on market demand. I am optimistic that this will happen, because gas production will increase and the Brazilian energy mix will push the demand.

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