The main beneficiary will be the Campos Basin, which had 80% of Brazil’s total oil production, but today accounts for only 50%
The National Petroleum Agency (ANP) is concerned about the drop in oil production – about 30 percent – in the oldest post-salt fields that are facing the natural decline. To stimulate investments in the revitalization of these mature fields, the agency will halve the percentage of royalties, which is 10%, on the output resulting from this increase. The measure will benefit mainly the Campos Basin, which has already accounted for more than 80% of Brazil’s total oil production, but now accounts for only 50%, steadily falling. This month, the basin completed 40 years from the start of production.
The revitalization of the older fields will generate significant investments in the oil industry, which will result in jobs in the industry. Abespetro, which brings together service companies for oil companies, estimates that these contributions in mature fields could create about 170,000 jobs in the period from 2018 to 2022.
“Less royalties, more jobs,” is one of the slogans of the campaign launched by Macaé city hall, in the north of the state. The municipality, once the country’s largest oil producer and bearing the title of “oil capital”, strongly felt the downturn in oil activities in the Campos Basin from 2014 due to the reduction of Petrobras investments, which faced financial difficulties due to the cases of corruption revealed by Operation Lava-Jato and the drop in oil prices.
The mayor of Macaé, Aluízio dos Santos Júnior (PMDB), who launched the campaign, predicts that these investments in old fields in the Campos Basin could generate around 20,000 jobs in the region. According to him, in the last five years, the city lost 38 thousand jobs in the oil industry, going from 163 thousand places in 2012 to only 125 thousand today:
– Macaé begins to breathe a more positive scenario with the resumption of the auctions and the prospects of new investments. But the project to recover oil production in the Campos Basin is fundamental. With low oil prices, companies are increasingly looking to cut costs, and reducing royalties will be important in attracting such investments.
BENEFICIAL ALSO FOR PETROBRAS
The Macaé campaign faced some resistance from other producing municipalities, but Santos Júnior stressed that both in the country and in the Campos Basin, it is necessary to invest to recover the production of the mature fields, and this will only be possible by giving some incentive.
ANP’s director general, Décio Oddone, explained that the reduction of royalties to stimulate the revitalization of mature fields is another of the important measures adopted by the agency to unlock investments in the sector in the short term. The ANP is preparing a resolution to regulate the issue that should be published in a maximum of six months.
– The auctions that will be made in September and October next will bring long-term investments, but we need to resume the activity in the short term. And so we are going to work on contracts that are in force with various measures, and one of them is the revitalization of mature fields to encourage increased production, “Oddone explained.
The Campos Basin is an example of the need for investments to revitalize the production of the old fields and could be one of the most benefited by the measure. In June, the basin produced 1.363 million barrels per day, 51% of the country’s total production (2.674 million barrels per day). Production in that month was about 11% lower than in June 2016, when it reached 1.531 million barrels per day, representing 60% of total production.
The stimulus to recovery of oil production in the old fields, according to sources, will directly benefit Petrobras as well. The state company has recently put up for sale several mature fields, 14 of them in the Campos Basin. The possibility of reducing royalties to recover production on renewal of contracts will increase the value of these fields. For Santos Júnior, in a short time, the production of the basin could increase to 1.5 million barrels per day.
On Thursday, 10/08 / Petrobras announced the discovery of pre-salt oil in the Campos Basin in the Marlim Sul Field area. The discovery is important because it is in a region that already has a large production infrastructure.