Pre-Salt # NOIA 2012

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National Ocean Industries Association …

National Ocean Industries Association
Annual Meeting
Panel: Brazil - Paradise or Bureaucratic Jungle?
Mandarin Oriental – Washington, DC
March 15th., 2012

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  • 1. BrazilParadise or Bureaucratic Jungle?National Ocean Industries Association - Annual Meeting – Mandarin Oriental – Washington, DC - March 15th., 2012 Claudio A. Pinho
  • 2. Brazilian Pre-Salt’s facts • Huge oil & gas fields • Located 16,400 - 22,900 feet below sea level • Ultra deep water drilling (more than 6,500 feet) • Under a salt layer 6,000 feet thick • Brazilian oil reserves estimated to be 14 billion barrels • Pre-Salt area reserves estimated to be more than 20 billion barrels Claudio A. Pinho
  • 3. 1988 ConstitutionThe 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
  • 4. Oil & Gas Legal Basis before Pre-SaltAmendment # 6 (Aug. 1995) – Revoked article 171which gives the Brazilian Companies some privileges.Amendment # 9 (Nov. 1995) – Changed the article 177to break the Petrobras monopoly and allow competition.Law # 9.478/97 [Brazilian Oil Law] (1997) – CreatedANP (National Petroleum Agency) and the rules for bidand contracting (concession model)Direct Action of Unconstitutionality (ADIN #3.273) (2011) – Brazilian Supreme Court declaresBrazilian Oil Law constitutional, and declares that oil & gasexploration can only happen in a competitive marketplace. Claudio A. Pinho
  • 5. 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 – PSA 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 – NOCin pre-salt contracts;3) Capitalization of Petrobras and onerous transfer of rights. Claudio A. Pinho
  • 6. Production Sharing Agreement Model NOC FOC COSTS 60% 40% Claudio A. Pinho
  • 7. Pre-Salt’s Production Sharing Agreement 30% Petrobras 70% Consortium NOC FOC COSTS 60% 40% 1st bill => Law # 12.351/10 Claudio A. Pinho
  • 8. Pre-Salt’s Production Sharing Agreement 30% Petrobras 70% Consortium PPSA FOC COSTS 60% 40% 2nd bill => Law # 12.276/10 Claudio A. Pinho
  • 9. Pre-Salt’s Production Sharing Agreement 30% Petrobras 70% Consortium PPSA FOC e ls a rr n B i llio COSTS 5 B 60% 40% 3rd bill => Law # 12.304/10 Claudio A. Pinho
  • 10. Pre-salt Perimeter • Does the onerous transfers of rights is a regulatory framework itself? • Petrobras answers “yes” and the industry accepted that idea. Claudio A. Pinho
  • 11. Risks and Opportunities• Petrobras is acting as a monopoly without any constitutional provision within the pre-salt area• ANP plays an oversight role rather than an regulatory role in pre- salt legislation;• There won’t be any bid in pre-salt areas at least for a few years;• There is no specific Law such as the Foreign Oil Spill Liability Act or the Oil Spill Liability Trust Fund; but they intend to file a bill called the National Contingency Plan• There is no association in Brazil to protect foreign companies in Brazil such as the NOIA• Chevron’s Brazilian oil spill showed that foreign oil companies have no inter locution with the Brazilian Government (scapegoat effect); Claudio A. Pinho
  • 12. Energy Tribune – December 1st, 2011 Claudio A. Pinho
  • 13. Risks and Opportunities In 2011 at OTC, Petrobras said that pre-salt will consume 40 million dollars per day by 2020• The Brazilian oil & gas industry will not be able to fill the jobs that are being created. Claudio A. Pinho
  • 14. Thank you! @ClaudioAPinhoThis presentation is posted at www.slideshare.net/capinho Claudio A. Pinho