Perspectives for the Brazilian Petroleum Sector After the Transition from Petrobras Monopoly to a Competitive Environment

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Perspectives for the Brazilian Petroleum Sector
After the Transition from Petrobras Monopoly to a
Competitive Environment
NOT AN OFFICIAL UNCTAD RECORD

• Ivan Simões Filho
• ismoes_at_gaffney-cline.com
• Gaffney, Cline and Associates
• www.gaffney-cline.com

UNCTAD IX Rio, June 8, 2004
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GCA Worldwide Presence
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GCA Full Spectrum Staff
Upstream
Midstream

• Geophysics
• Geology
• Petrophysics
• Reservoir Eng.
• Drilling Eng.

• Petroleum Engineering
• Process Engineering
• Operations

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GCA in Latin America

• Company started in Latin America in 1962
• High degree of activity in all countries and
  knowledge/ understanding of local issues
• Fulltime staff comprises professionals from
  Argentina, Brazil, Colombia, Mexico, Trinidad
  Tobago and Venezuela

GUYANA
VENEZUELA
SURINAME
FRENCH GUIANA
COLOMBIA
BRAZIL
PERU
BOLIVIA
PARAGUAY
CHILE
ARGENTINA
URUGUAY
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The 1980s World
Open to Foreign Investment in the Energy Sector
Some Foreign Investment in the Energy Sector
Closed to Foreign Investment in the Energy Sector
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Todays World . is Getting Bigger
Open to Foreign Investment in the Energy Sector
Transition Toward Total Opening of the Energy
Sector to Foreign Investment
Some Foreign Investment in the Energy Sector
Closed to Foreign Investment in the Energy Sector
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An Impressive Production Growth
Brazil is the 15th world oil producer
Source Petrobras
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A Growing Gas Market
But still a small proportion of the energy matrix
Source Ministry of Mines and Energy
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Growing Gas Proportion
Natural gas participation grew 15 in 2002
Source Ministry of Mines and Energy
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Some Natural Gas Issues

• Bolivia-Brazil gas pipeline is still operating
  with spare capacity
• 20,000,000 m3/day
• 36,000,000 m3/day average consumption
• Significant gas discoveries in several basins
• Recent power shortage in Northeastern region
• Thermal plants could not operate due to gas
  shortage
• Need to link regional gas pipeline networks

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Growing Use of Bolivia-Brazil Gas Pipeline
Currently using 2/3 of its capacity
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Three Separate Gas Pipeline Networks
Source Petrobras
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13 Years of Reserve Growth
356 reserve replacement in 2003
Source Petrobras
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Impressive Reserves Growth

• 2.3 billion boe proved
• gt4 billon boe proved probable
• 400 million bbl light oil
• 365 reserve replacement

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Towards Self Sufficiency
Brazil produces today 85 of its petroleum
consumption
Source Petrobras
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Important Discoveries in 2003

• Golfinho
• BES-100 Block, Espírito Santo Basin
• Light oil (gt40 API)
• Baleia Franca
• BC-60 Block, Campos Basin
• Heavy oil (19 API)
• Mexilhão
• BS-400 Block, Santos Basin
• Gas and condensate

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The Whale Park
Source www.petrobras.com.br
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Jubarte

• Development Phase 1 45,000 bopd
• 4 producing wells
• First oil 2005
• FPSO P-34
• Development Phase 2 150,000 bopd
• 21 producing wells, 6 injectors
• First oil 2008

• Discovered Jan 2001
• 1-ESS-100 well
• 1323 m water depth
• 77 Km from coast
• 17 API
• Pilot Production 21,000 bopd
• Long term production test October 2002
• Declaration of Commerciality on December 11, 2002
• ESS-110H well (1076m in reservoir)
• FPSO Seillean

Source Petrobras
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Cachalote

• Discovered November 2002 (ESS-116 well)
• 1478 m water depth
• 80 km from coast
• 19 API
• Eocene turbidites
• Declaration of commerciality December 27, 2002
• One phase development
• FPSO
• 10 wells (6 producing, 4 water injection)

Source Petrobras
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Radical Change in Round 5
Source www.brasil-rounds.gov.br
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Decreasing Proportion of Awarded Blocks
Source www.brasil-rounds.gov.br
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Decreasing Competition
Source www.brasil-rounds.gov.br
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From State Monopoly to a Competitive Exploration
Environment
Source ANP
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33 Exploration Concessionaires
Source ANP
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Conclusions

• Very prospective areas
• Need persistence
• New plays
• All types of opportunities
• Light oil
• Heavy oil
• Gas and condensate
• Mature basins
• Need for infrastructure
• Refining
• Pipelines
• Huge market
• Stable macro economy

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Thank you