Friday, October 25, 2013

Brazil’s Lottery Ticket : “85 percent of the profits generated in Libra (Brazil'’s first pre-salt offshore oil field) will stay in Brazil and with Petrobras (state-owned oil giant).”

President Dilma Rousseff

Said : President Dilma Rousseff, after the successful auction for the country’s first pre-salt offshore oil field, Libra, as reported in the Rio Times of October 22, 2013. 

The winner was the five-party consortium presenting the only bid for the field. The consortium pledged to the government the minimum 41.65 percent of profit oil, or the barrels remaining after all costs are covered, to win the 35-year production sharing contract to develop the super-giant Libra field in deep waters of the Atlantic Ocean. The contract is expected to be signed in November 2013.

“This is a long way from privatization,” Rousseff said in a televised address to the nation, adding, “… production of these riches will bring profits commensurate with the huge investments that will take place in our country." She promised to divert a significant proportion of the earnings into education.

Petrobras, in a press release, said : "A consortium comprised of - Petrobras (10%), Royal Dutch Shell Plc (20%), Total SA (20%), China National Petroleum Corp., CNPC, (10%), China National Offshore Oil Corporation - Cnooc Ltd. (10%) and Petrobras - was the winner in the 1st Pre-salt bidding round held by the Brazilian National Petroleum Agency (ANP). With this result, the consortium has acquired rights and obligations to the Libra block. As set forth under the law, the National Council for Energy Policy (Conselho Nacional de Política Energética - CNPE) established a 30% stake to be acquired directly by Petrobras. Therefore, with the auction results, Petrobras total participation in the consortium will be 40% and all its rights and obligations will be proportional to this stake.

The government will receive a signature bonus of R$ 15 billion ($6.9 billion) by the winning consortium in a single payment which includes Petrobras' proportionate share of R$ 6 billion.

Brazil Privatizes Libra Oil Field 

According to the release, the winning consortium offered 41.65% of the profit oil for the Federal Government. This percentage relates to the surplus in oil to be paid under a reference scenario of an oil price between $100.01 and $120.00 per barrel of oil and production per active producing well of between 10,000 and 12,000 barrels per day. This percentage will vary in accordance to international oil price and well productivity, as set forth by the Brazilian regulator, Agência Nacional do Petróleo (ANP). ANP estimates that the recoverable resources of Libra field is between 8 to 12 billion barrels of oil and a total gross peak oil production could reach 1.4 million barrels per day. Production could begin in five years, with plans for up to 12-18 production vessels permanently anchored on the field, each of them pumping up to 30,000 barrels per day.
Libra is an economic revolution to Brazil 
Brazil's Minister of Mines and Energy Edison Lobao

According to MinnPost - a nonprofit, nonpartisan news enterprise - the deepwater Libra oil prospect in the Santos Basin about 180 miles off the coast of Rio de Janeiro is billed as one of the biggest oil discoveries this century, containing an estimated 8 billion to 12 billion barrels of oil. After discovery in 2007, the basin seemed certain to enrich Brazil and any industry partners who might help develop the presalt fields, so-called because they sit more than a mile below the ocean and under another 2.5 miles of earth and salt. 

As per the contract, the block exploration phase will last four years. The consortium will have to adhere to minimum local content requirements in each phase of the project. For the exploration phase this percentage is 37%, in the development stage - 55% for systems with first oil until 2021, and 59% for those after 2022. Petrobras is confident of the success of Libra development which is one of the most promising accumulations of the Pre-salt area.
It is worth mentioning here that, according to media reports, the internal computer network of Petrobras was one of the prime targets of surveillance by the NSA, the National Security Agency of the United States. These reports NSA espionage were based on the top secret documents leaked by Edward Snowden who has acquired world fame on account of his NSA leaks.

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