Petrobras Aims to Install Natural Gas Platforms in the Pre-Salt, but It May Not Be Economically Viable

Written by Paulo Nogueira

Published on 04/07/2020 at 14:59

Unidade FLGN Shell Prelude escoando produção para um navio GNL

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Petrobras intends to construct and mobilize floating liquefied natural gas (FLNG) platforms to evacuate its production in the pre-salt, off the extreme Brazilian offshore. According to industry experts, this strategy may bring more economic harm than solutions for GNL evacuation.

It is well known in the market that Petrobras, along with other offshore operators, is facing infrastructure difficulties and simply cannot send the gas produced in the pre-salt to the coast. They are forced to reinject it into the well or burn the gas due to excess production.

For reference, the breakeven cost of PETRONAS PFLNG-1, from Malaysia, is around US$ 10 per 26.8 m³ (cubic meters) or 1 MMBtu, and the breakeven cost of the FLNG Shell Prelude unit is approximately the same, around US$ 8 to US$ 12 per m³.

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Why May It Not Be a Good Idea for Petrobras to Mobilize LNG Platforms Now?

Global LNG prices vary widely, depending on the location, but in some places recently, they are being sold for 1/3 or less of the breakeven costs shown above.

That said, with the growing global LNG glut, this idea from Petrobras to install LNG Platforms will likely incur financial losses for the state company, as production costs in Brazil are among the highest in the world.

What Are FLNGs?

FLNG refers to an offshore facility that remains floating above a field to exclusively produce natural gas. FLNGs produce, liquefy, store, and transfer liquefied natural gas via a carrier ship to the mainland, where the market and financial resources are based.

Petrobras Aims to Install Natural Gas Platforms in the Pre-Salt, but It May Not Be Economically Viable

Why May It Not Be a Good Idea for Petrobras to Mobilize LNG Platforms Now?

What Are FLNGs?

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