Nov 11, 2019

Petrobras plans to put into operation a total of 10 FPSO’S in the giant Buzios field in the Santos Basin pre-salt by the end of the next decade, including the four already in production.

With only four platforms in operation, with 150,000 barrels of oil per day of capacity each, Petrobras has already produced 600,000 barrels of oil equivalent per day (boe / d) in Buzios.

The fifth unit is expected to start in the second half of 2022, the company said in a recent statement. The unit will have the same capacity as the others and is already under construction.

Some of the new FPSOs to be contracted could hold more than 200,000 barrels a day of oil, according to an exploration and production executive director Carlos Alberto Oliveira.

The statements were made after Petrobras expanded its exploration rights in Buzios on Wednesday through an auction that brought greater predictability of how the company will conduct the important area in the long run.

Petrobras President Roberto Castello Branco also announced the prospects for the FPSOs and defended that it was a great deal to pay together with two Chinese oil companies 68.2 billion reais to have access to other volumes of oil already discovered in the field.

“Buzios is a world class asset, has substantial reserves, Petrobras knows it very well,” he said, noting that the cost of extracting Buzios is “very low”, at $ 4 per barrel.

“It is an investment that is resilient to low oil price scenarios, around $ 40 a barrel,” he said.

Prior to the TOR auction, the company had the right to exploit alone up to 3.15 billion boe from the field, which promises to become Brazil’s largest producer, even surpassing the Lula field, also in the Santos Basin pre-salt.

The TOR auction was awarded to a consortium formed by Petrobras, with a 90 percent stake, in partnership with the Chinese CNODC and CNOOC, each with 5%.

The Chinese will now have to close an agreement with Petrobras to define how the area will be explored and which provides for a major repayment of investments already made in the field by the state oil company. Thecompanies will try to advance this agreement to December 2020, before the deadline of September 2021.


Oliveira also pointed out that the oil company does not intend to do a farm-out in the Buzios block, or sell a slice of the asset.

An eventual sale of the asset stake could be an important way for the company to raise funds to pay for the Buzios signing bonus. Alone the company will pay for Buzios about 61 billion reais.

But Executive Director of Finance and Investor Relations, Andrea de Almeida, said the company maintains deleveraging targets, despite large offers for pre-salt assets, which have raised market concerns about debt issues.

The CFO said the company has options to raise funds to fund auction offers, such as divestments and a co-participation agreement with Chinese partners in Buzios, where Petrobras already acts under the original assignment contract.

Source: Reuters

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