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2010 Brazil Oil & Gas Seminar

2010 Brazil Oil & Gas Seminar. Pre-Salt Opportunities & New Regulatory Framework.

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2010 Brazil Oil & Gas Seminar

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  1. 2010 Brazil Oil & Gas Seminar Pre-Salt Opportunities & New Regulatory Framework Magda Chambriard Director Brazilian Petroleum Agency

  2. Institutional Evolution O&G sector Constitutional Amendment Nº 9/95 Law nº 9.478/97 – Creation of ANP & CNPE(National Energy Policy Council) Pre-salt IM group Implementation of the ANP Self-sufficiency Pre-salt discovery Directive CNPE nº 8/03 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2007 Concession contracts signed with Petrobras (Round Zero) GT ~ 60/65% Bill 5.938/2009 for the Pre-Salt areas ANP studies areas and promotes the bidding rounds according CNPE approval. ANP studies the areas, defines the blocks and promotes the bidding rounds.

  3. Current scenario (2009) Proven Reserves(*) Oil – ~13 billion bbl Gas – ~366 billion m3 Production Oil e LGN – 2,03 million bbl/day Gas – 57,9 million m3/day (*) without pre-salt discoveries Imports/Exports Balance Oil – 132,5thousand bbl/day Gas – 23,5 million m3/day

  4. Current scenario Concession contracts 38 sedimentary basins29 principal basins • 7,5 million km2 Concession Contracts: Exploratory Phase 377 blocks (JUN/2010) Production Phase 368 fields 304 operated by Petrobras

  5. Marlim Field Marlim Field: discovered in 1985 in 835m water depth Production (DEC/2008): 345 thousand bbl/day Proven Reserves (DEC/2008): 1,7 Billion bbl Royalties: R$ 2.15 billion Special Participation: R$ 4.84 billion Government Take ~54%(2008)

  6. The Pre-Salt as a New Paradigm

  7. Pre-Salt AreaThe study of the Interministerial Group Wells being drilled (APR/2010) Oil Oil and Gas Gas Pre-Salt Polygon (Bill of Law 5.938/2009) Fields producing/under development Exploratory Rounds (Rounds) 0 1 2 3 4 5 6 7 9 Pre-Salt Area 2-ANP-2-RJS 2-ANP-1-RJS Dry well

  8. NewRegulatory Framework New rules for E&P in the Pre-Salt area: Four (04) Bills • Production-sharing agreements for E&P in the unlicensed Pre-Salt areas (PL 5.938/09); • Creation of a new state company – Pre-Sal (PL 5.939/09); • Formation of a Social Fund (PL 5.940/09); • Onerous assignment of rights, which shall grant Petrobras the right to produce in certain areas of the Pre-Salt, up to 5 billion boe (PL 5.941/09).

  9. Production Sharing Contract Bill n. 5.938/09 Senate approval on 06/10/2010 General Features • Objective: • Increase the Brazilian Society benefit on the pre-salt E&P. • Main Rules: • Brazil shall adopt the Production Sharing Contract in the Pre-Salt Area; • Petrobras shall be the only operator in this area with at least 30% participation; • Opportunities in the pre-salt area shall be bidden considering Petrobras as the Operator; • The winner shall be the one who offers the biggest share of oil production to the State; • A New State Company shall run the State share of the contract; • Petrobras can be contracted without a bidding process; • ANP provides the bidding rounds and regulates the contracts.

  10. Pre-Salt Social Fund Bill n. 5.940/09 Senate approval on 06/10/2010 • The Social Fund shall use the resources generated by the production-sharing contracts in reducing poverty; education; culture; science and technology; environmental sustainability. • The revenue of the Social Fund will come from the sale of profit oil, from the signature bonus and from the royalties destined to the Federal Government. Investment Policy • Social Fund shall carry out investments in Brazil and abroad in order to diversify the risk and avoid the problems of the “Dutch disease” • Investments shall follow solidity criteria: liquidity, risk classification and diversification, expected return • Investments in Brazil may be used in infrastructure projects • Financial institutions may be hired to act as operating agents

  11. The New State Company Bill n. 5.939/09 Lower Court approval on 11/18/09 New State Company • Shall have a qualified technical staff, but shall NOT be an operator; • Participates in the PSC on behalf of the Brazilian Government; • Shall have casting vote, according to the contract.

  12. Onerous Assignment Bill n. 5.941/09 Authorization to assign to Petrobras the right to explore and produce oil and gas up to 5 billion boe, in selected areas not yet under contracts; Senate approval on 06/10/2010 Objective: Petrobras capitalization • Authorization to subscribe and pay in new shares of Petrobras’ joint stock.

  13. The decision of drilling wells to increase pre-salt value Wells being drilled (APR/2010) Oil Óil and Gas Gas Pre-Salt Polygon (Bill of Law 5.938/2009) Fields producing/under development Exploratory Rounds (Rounds) 0 1 2 3 4 5 6 7 9 Pre-Salt Area (PL 5.938/09) TAC Limit (drilling) Exclusion Area 3D Seismic Pub Exc Pos 3D Seismic Conf NonExc Pos 2D Seismic Conf Exc Pos 2D Seismic Conf NonExc Pos Franco 2-ANP-1-RJS Libra 2-ANP-2-RJS

  14. The decision of drilling wells to increase pre-salt value 2-ANP-1-RJS 2-ANP-2-RJS Franco discovery (2-ANP-1-RJS) Forecasted Recoverable Volume 4,5 Bi bbl 3D structural map of the salt base as interpreted by the ANP technical staff (2010)

  15. Brazilian Opportunities Pre-salt Campos & Santos Basins (50 billion barrels ?) Campos Basin Santos Basin If proven the way ANP forecasted, Brazil will need to invest heavily in infrastructure (platforms, pipelines, oil pipelines, ports, ships, steel, etc.). In a 1st step Brazil considers to hire 40 rigs and semi-submersible platforms, 234 ships, including 70 large ones (Lima, 2008) Fonte: PETROBRAS, 2009

  16. Brazilian Opportunities New Bidding Rounds After the approval of the Pre-salt bills ANP shall bid: Pre-salt areas under PSC (~ 2,3% sedimentary area) Other areas under concession contracts (> 97% sedimentary area) ANP waits for CNPE approval the 11th Bid Round; The 11th Bid Round shall focus on the Brazilian equatorial margin.

  17. Final Remarks • The Pre-Salt is a new paradigm in Brazil; • Production-sharing contracts shall be applied for the Pre-Salt area (around 2% of the Brazilian sedimentary area); • Concession contracts shall be applied for ALL other areas (> 97%); • ANP waits for CNPE approval to promote the 11º bid-round focusing the equatorial margin; • And to promote a bid round focusing pre-salt opportunities; • In Brazil, opportunities go far beyond the pre-salt.

  18. Agência Nacional do Petróleo, Gás Natural e Biocombustíveis Av. Rio Branco, 65 12º ao 22º andar tel. 21 2112-8100 www.anp.gov.br

  19. Oil Price Evolution

  20. Govern Take around the world Govern Take Evolution (2002 – 2007) Brazil – 60% GT

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