Offshore Activity

Petrobras Result of the Second and Third Bidding Rounds – Production Sharing Regime

Rio de Janeiro, October 27, 2017 – Petróleo Brasileiro S.A. – Petrobras, further to the Material Fact disclosed on May 25, 2017, reports that it has acquired, in partnership with other companies, three offshore blocks in the 2nd and 3rd bidding rounds under the production sharing regime, held today by the National Agency of Petroleum, Natural Gas and Biofuels (ANP), as the operator in all blocks.

Under the production sharing regime, the consortium transfers to the government a percentage called “surplus in profit oil to the Federal Government”, which applies on revenue minus production costs and royalties.

The offer of surplus in profit oil to the Federal Government was the sole criterion adopted by ANP to define the winning bid, whereas the signature bonus value, the minimum exploratory program, and commitments of local content were already set in the bidding terms.

The following table summarizes the blocks acquired in partnership by Petrobras in the 2nd and 3rd bidding rounds under the production sharing regime:

Block

Consortium Composition

Petrobras Bonus

(R$ million)

Surplus in profit oil (%)

Entorno de Sapinhoá

Petrobras (45%)

Shell (30%)

Repsol Sinopec (25%)

90

80,00

Peroba

Petrobras (40%)

BP (40%)

CNODC (20%)

800

76,96

Alto de Cabo Frio Central

Petrobras (50%)

BP (50%)

250

75,86

Similarly to the 14th bidding round under the concession regime, held in September, Petrobras acted selectively in the auctions carried out today, reflecting its strategic vision to recompose its exploratory portfolio, which seeks to maintain the relationship between reserves and production and ensure the sustainability of the company’s future oil and gas production.

Furthermore, the operation in consortia with important companies is aligned with Petrobras’ strategic goal to strengthen partnerships, sharing risks, combining technical and technological skills and capturing synergies to leverage results, while reflecting the importance of these areas in Brazil for world-class oil companies.

In Entorno de Sapinhoá, the company was successful in maintaining the same consortium composition of Sapinhoá, adjacent unitizable area, in which Petrobras already acts in partnership with Shell and Repsol Sinopec. In Peroba block, the consortium was formed, jointly with Petrobras, by CNODC, a subsidiary of CNPC, an important partner in the Pre-salt Santos Basin, and BP, which is also a partner in the Equatorial Margin and in the Campos Basin. In Alto do Cabo Frio Central, Petrobras was the winning bidder in partnership with BP.

The Entorno de Sapinhoá block is located in the central part of the Santos Basin. In August 2017, the Sapinhoá field was the second largest producer of oil and natural gas in Brazil, with 325 thousand of oil equivalent barrels produced per day.

The total amount of the signature bonus to be paid by Petrobras, R$ 1.14 billion, represents 0,5% of the investments foreseen in the 2017-2021 Business and Management Plan and will be reallocated within the currently approved budget.

The auction held today will be followed by a qualification stage of winning bidders and subsequent signing of contracts.

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