Pre-Salt # Exploiting Brazil’s Petroleum Reserves

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The Center for Latin American Issues – George Washington University – Washington, DC – June 6th., 2012

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Pre-Salt # Exploiting Brazil’s Petroleum Reserves

  1. 1. Exploiting Brazil’s Petroleum ReservesThe Center for Latin American Issues – George Washington University – Washington, DC – June 6th., 2012 Claudio A. Pinho C
  2. 2. Energy Consumption 2010-2030 Scenario Claudio A. Pinho C
  3. 3. Energy Consumption 2010-2030 Scenario 2010* Projections*** BP Statistical Review of World Energy 2011 ** International Energy Outlook 2011 US Energy Information Administration Claudio A. Pinho C
  4. 4. Energy Consumption 2010-2030 Scenario 2010* • Usually wind, solar and biomass are included in renewables, but hydro still the main source of renewable energy (fact) • Together fossil fuels represent 86-88% of world energy consumption matrix (fact)* BP Statistical Review of World Energy 2011 Claudio A. Pinho C
  5. 5. Energy Consumption 2010-2030 Scenario• Renewables will Projections** change in 2030 for 20%• Fossil fuels will decrease to 64% and natural gas will have a share of 42%• In absolute numbers the increase of energy consumption from 2012 to 2030 is equivalent what US consumes today ** International Energy Outlook 2011 US Energy Information Administration Claudio A. Pinho C
  6. 6. Oil & Gas is not only energyOil products (refining) Claudio A. Pinho C
  7. 7. What changed a few years ago?• Oil sands in Canadá Claudio A. Pinho C
  8. 8. What changed a few years ago?• Oil sands in Canadá• China energy policy Claudio A. Pinho C
  9. 9. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa Claudio A. Pinho C
  10. 10. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa• Fracking (or Fracturing technology) in shale Gas Claudio A. Pinho C
  11. 11. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa• Fracking (or Fracturing technology) in shale Gas• LNG (Liquid Natural Gas) Claudio A. Pinho C
  12. 12. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa• Fracking (or Fracturing technology) in shale Gas• LNG (Liquid Natural Gas)• Solar and Wind technologies are improving Claudio A. Pinho C
  13. 13. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa• Fracking (or Fracturing technology) in shale Gas• LNG (Liquid Natural Gas)• Solar and Wind technologies are improving Claudio A. Pinho C
  14. 14. What changed a few years ago?• Oil sands in Canadá• China energy policy• Pre-Salt in West Africa• Fracking (or Fracturing technology) in shale Gas• LNG (Liquid Natural Gas)• Solar and Wind technologies are improving• US geopolitics axis Claudio A. Pinho C
  15. 15. Changing US Geopolitics Claudio A. Pinho C
  16. 16. Changing US Geopolitics Claudio A. Pinho C
  17. 17. Brazilian Pre-Salt• 2008 – First pre-salt discoveries• Brazilian oil reserves estimated to be 14 billion barrels• Pre-Salt area reserves estimated to be more than 20 6,500 ft. billion barrels Corcovado Mountain Huge oil & gas fields 10,000 ft Located under 16,400 - 22,900 Salt feet of sea level (approximately 5.000 - 7.000 meters) Ultra-deep water drilling (under 6,500 feet or approximately 2,000 meters) Pre-Salt Under a pre-salt layer of 6,000 feet thick (average) Claudio A. Pinho C
  18. 18. Brazilian Pre-Salt Pre-salt area Tupi Block LOGISTICS AND INFRASTRUCTURE 43 Claudio A. Pinho C
  19. 19. 1988 Constitution and its ProvisionsThe natural resources all belong to the Federal Government the continental shelf the exclusive economic zone the territorial sea the mineral resources includingthose of the subsoilThe economic order establishes the principle of freecompetition. Claudio A. Pinho C
  20. 20. Oil&Gas Legal Framework before Pre-SaltAmendment # 6 (Aug. 1995) Revoked article 171 whichgives the Brazilian Companies some privileges.Amendment # 9 (Nov. 1995) Changed the article 177 tobreak the Petrobras monopoly and allow competition.Law # 9.478/97 [Brazilian Oil Law] (1997) Created ANP(National Petroleum Agency) and the rules for bid andcontracting (concession model)Direct Action of Unconstitutionality (ADIN #3.273) (2011) Brazilian Supreme Court declares BrazilianOil Law constitutional, and declares that oil & gasexploration can only happen in a competitive marketplace. Claudio A. Pinho C
  21. 21. Pre-Salt BillsFederal Government sends 3 bills toBrazilian Congress to create the Pre-salt legal framework:1) Regulatory pre-salt law (changingthe contracts to Production ShareAgreement and defines thepre-salt area);2) A bill to create a state company called PPSA (Pré-SalPetróleo S/A) to work as the National Oil Company (NOC) inpre-salt contracts;3) Capitalization of Petrobras and onerous transfer of rights. Claudio A. Pinho C
  22. 22. Production Sharing Agreement ModelNOC IOC COSTS60% 40% Claudio A. Pinho C
  23. 23. Pre-Salt Production Sharing Agreement 30% Petrobras 70% ConsortiumNOC IOC COSTS60% 40% 1st bill => Law # 12.351/10 Claudio A. Pinho C
  24. 24. Pre-Salt Production Sharing Agreement 30% Petrobras 70% ConsortiumPPSA IOC COSTS60% 40% 2nd bill => Law # 12.276/10 Claudio A. Pinho C
  25. 25. Pre-Salt Production Sharing Agreement 30% Petrobras 70% ConsortiumPPSA IOC e ls a rr n B i llio COSTS 5 B60% 40% 3rd bill => Law # 12.304/10 Claudio A. Pinho C
  26. 26. Pre-salt Perimeter • Does the onerous transfers of rights is a regulatory framework itself? • Petrobras answers “yes” and the industry and the Government accepted that idea. Claudio A. Pinho C
  27. 27. What will happen, what will not & challenges• With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role Claudio A. Pinho C
  28. 28. What will happen, what will not & challenges• With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role Claudio A. Pinho C
  29. 29. What will happen, what will not & challenges • With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role• A bill of National Contingency Plan is almost ready to be filed (PNC Plano National de Contingência) with new liability standards (probably will be a Presidential Decree) Claudio A. Pinho C
  30. 30. What will happen, what will not & challengesEnergy Tribune December 1st, 2011 Claudio A. Pinho C
  31. 31. What will happen, what will not & challenges • With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role• A bill of National Contingency Plan is almost ready to be filed (PNC Plano National de Contingência) with new liability standards (probably will be a Presidential Decree)• In 2013 Brazil will bid for new blocks in pre-salt legal framework offshore and maybe onshore Claudio A. Pinho C
  32. 32. What will happen, what will8th, 2012 McClatchy – March not & challenges McClatchy March 8th, 2012 Claudio A. Pinho C
  33. 33. What will happen, what will not & challenges • With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role• A bill of National Contingency Plan is almost ready to be filed (PNC Plano National de Contingência) with new liability standards (probably will be a Presidential Decree)• In 2013 Brazil will bid for new blocks in pre-salt legal framework offshore and maybe onshore• Royalties in the new legislation are far to be solved Claudio A. Pinho C
  34. 34. What will happen, what will not & challenges • With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role• A bill of National Contingency Plan is almost ready to be filed (PNC Plano National de Contingência) with new liability standards (probably will be a Presidential Decree)• In 2013 Brazil will bid for new blocks in pre-salt legal framework offshore and maybe onshore• Royalties in the new legislation are far to be solved• There is no policy for independent producers Claudio A. Pinho C
  35. 35. What will happen, what will not & challenges • With the new Director, Magda Chambriard, ANP (Brazilian National Petroleum Agency) is returning to its regulatory role• A bill of National Contingency Plan is almost ready to be filed (PNC Plano National de Contingência) with new liability standards (probably will be a Presidential Decree)• In 2013 Brazil will bid for new blocks in pre-salt legal framework offshore and maybe onshore• Royalties in the new legislation are far to be solved• There is no policy for independent producers• Onshore gas could make the difference Claudio A. Pinho C
  36. 36. What will happen, what will not & challenges• Brazilian FTC (CADE) does not really enforce antitrust law in oil&gas market (Law 12,529/2011 came into force last May 29th) Claudio A. Pinho C
  37. 37. pre-salt referencesPre-Salt - The new Oil Regulation in Brazil -Manhattan Connection Pre-Salt - Part. 1-3 - Claudio A. Pinho Claudio A. Pinho C
  38. 38. Thank you! @ClaudioAPinhoThis presentation is posted at www.slideshare.net/capinho Claudio A. Pinho C

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