Brazilian Oil Giant to Receive $2.94 Billion from Chinese for Eighth Unit of Búzios Field, the Largest Deepwater Oil Field in the World

Chinese Will Pay US$2.94 Billion to Brazil’s Largest Oil Company, Which Estimates More Than 11 Billion BOE in Búzios. The Contract Provides for Local Content Compliance of 25%, and the Project Includes the Interconnection of 14 Wells to the FPSO

Petrobras announced yesterday, June 12, that it signed with Pré-sal Petróleo S.A. (PPSA) and partners CNODC Brasil Petróleo e Gás Ltda. (CNODC) and CNOOC Petroleum Brasil Ltda. (CNOOC) the Búzios Participation Agreement, which will regulate the coexistence of the Cost-Production Assignment Contract and the Excess Production Sharing Contract for the Búzios field in the pre-salt Santos Basin.

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Petrobras has stated that Búzios is the largest deepwater oil field in the world. Accordingly, the company pointed out more than 11 billion barrels of oil equivalent (BOE) recoverable from the asset.

The contract provides for local content compliance of 25%, a requirement established in the bidding document and committed to the ANP for the Búzios field.

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The project entails the interconnection of 14 wells to the FPSO, consisting of eight producers and six injectors, through subsea infrastructure comprising rigid production and injection pipes and flexible service lines.

Currently, there are four units operating in Búzios, accounting for over 20% of Petrobras’s total production. The fifth, sixth, and seventh platforms planned for the field are under construction, and the ninth unit (P-80) is in the contracting process, according to the company (with Reuters).

Negotiation

Negotiations began shortly after the auction, held on November 6, 2019, where Petrobras acquired 90% of the exploration and production rights for the excess volume of the Cost-Production Assignment Contract for the Búzios field, in partnership with CNODC (5%) and CNOOC (5%). Together, the parties and PPSA defined the Development Plans for the field, including production curve estimates, using oil and gas price assumptions, discount rate, and cost metrics established in MME Ordinance No. 213/2019, aligning with the following participations:

Thus, the total compensation amount due under the Cost-Production Assignment Contract, which belongs 100% to Petrobras, for the Production Sharing Contract, is US$29.4 billion, which will be recovered as costs in oil by the contractors.

“As Petrobras holds a 90% stake in the consortium under this contract, the amount corresponding to the 10% interest of partners CNOOC and CNODC, totaling US$2.94 billion, will be received upfront by Petrobras on the date the agreement comes into effect,” said Petrobras.

Búzios Will Be 92.666% State-Owned, While Each of the Chinese Will Have 3.667%

With the agreement coming into effect, the participation in the Búzios deposit will be 92.666% of Petrobras, while each of the Chinese partners will hold 3.667%.

The effectiveness of the agreement is subject to approval by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), followed by the payment of the partners’ share of compensation to Petrobras.

According to Petrobras, the estimated participation and compensation presented are based on the effective date of the Agreement on 01/09/21, and as soon as the date is confirmed with ANP’s approval, necessary adjustments will be made based on accumulated production and investments made up to that date.

Petrobras also reported that it signed a contract with the joint venture formed by the companies Saipem and DSME worth US$2.3 billion for the provision of the P-79 platform, the 8th unit to be installed in the Búzios field.

Petrobras Presents the FPSO Carioca Platform at the Brasfels Shipyard in Angra dos Reis, and Rio Authorities Promise 5,000 Jobs in Shipbuilding for the State

Shipbuilding – Last Thursday (10/06), Brazil’s largest oil company invited authorities from the state of Rio de Janeiro to present the FPSO Carioca oil platform, which is being built by Modec at the Brasfels shipyard in Angra dos Reis, on Rio’s Green Coast. With two weeks left until the completion of the works, the unit, which belongs to Petrobras, will have its final destination in the Sépia field in the pre-salt Santos Basin, where it will start operations in August.

The companies also discussed the market difficulties in shipbuilding related to technology, infrastructure, and lack of tax incentives to make them more competitive. According to the parliamentarian, there is a forecast of 5,000 new jobs with constructions in shipyards in the state.

“It is a market with a significant contribution to the economic development of the state, with a growing outlook for new works, but it needs a development plan. With the construction of the P-78, MV-32 and Platform Almirante Tamandaré, there is a forecast of 5,000 new jobs,” said the parliamentarian.