More Waivers for Libra

The Libra consortium (Petrobras, Total, Shell, CNOOC and CNPC) must request ANP for a waiver to charter drilling rigs at the Libra project, the country’s first production sharing area, in the Santos Basin pre-salt. The measure is a reflection of the failure of the Sete Brasil project, which would provide drill rigs for Petrobras with a high index of local content.

Petrobras, the operator of the area, currently uses two vessels chartered with Seadrill for the exploratory stage at  Libra. The West Tellus and West Carina were built in Korea and have Panama flag. The vessels were the solution found by Petrobras to not delay the progress of the Libra project.

The consortium drills its 11th well in Libra. Under the contract signed, the charter of vessels for the exploratory stage in Libra must prove a 30% index of local content. For the development of production, this index rises to 50%. In order to have the waiver application approved, the consortium must apply for the measure before the end of the exploratory period, ie. until December of this year.

The ANP has informed, according to its press office, that so far the Libra project has only the waiver request for the FPSO filed. The public hearing for this project will take place on the 30th.

Historical

When the local content indexes for the charter of drill ships for Libra were defined, the only local content certificate approved by the ANP in Brazil was that of Olinda Star, of Queiroz Galvão, about 38%. The decision to raise the requirement was made because Petrobras was the obligatory operator of Libra and would be served by the 28 drill ships contracted with Sete Brasil.

Technical Note 30/2013-DEPG / SPG-MME points out that the starting point for the definition of local content of Libra was the onerous assignment contract, signed three years before the end of the Lula administration. The problem is that up to now, after another three years, there is still no precise measurement of what has been achieved. In the aforementioned inspections, the offshore drill ship charter sub-station rarely goes above 10% index, in only one case reaching 23%.

Technical Note 30/2013 CL Sharing

By recovering all the history that led to the definition of the local content indices of the Libra sharing agreement, it is questionable how a plan that took so long to be made threatens to fail to pass in its first tests. An analysis demonstrates that data were missing to corroborate the challenge of sustaining the development of the domestic industry with pre-salt oil.

The MME ended up deciding the local content of Libra based on statements made by the Prominp association on the one hand and Petrobras on the other. It was up to the Ministry to decide on the  points based on the “expectation of growth of our industry until the time when goods and services would be needed” and, furthermore, “instituting a challenge to be pursued.”

This information is consolidated in Technical Note 30/2013-DEPG / SPG-MME. The MME analysts even expresses in two situations the desire to have more data from the industry to define the requirements of local content.

At one point, the document states that “it is hoped that the study scheduled to be prepared within PROMINP could add more information on the future capacity of the domestic industry” and concludes that “for the next bids , a study to be conducted by PROMINP should be more focused on the capacity of the industry “.

The document was obtained by Brasil Energia Petróleo at the end of 2013, through the Access to Information Law, but the MME denied access to the statements, claiming “private and strategic character of the companies”, choosing to release only studies of Prominp or ordered by the BNDES and the IBP, as well as presentations by Petrobras executives.

 

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