2010 Brazil Oil & Gas Seminar2010 Brazil Oil & Gas Seminar

Magda Chambriard Director

Brazilian Petroleum Agency

Pre-Salt OpportunitiesPre-Salt Opportunities&&

New Regulatory FrameworkNew Regulatory Framework

Self-sufficiencyPre-salt discovery

2001200119981998 1999199919951995 2003200320002000 2002200219971997 20042004 20052005 20062006

Constitutional Amendment Nº 9/95

Law nº 9.478/97 – Creation of ANP & CNPE(National Energy Policy Council)

Implementation of the ANP

Concession contracts signed with Petrobras (Round Zero) GT ~ 60/65%

20072007

Directive CNPE nº 8/03

ANP studies the areas, defines the blocks and promotes the bidding rounds.

ANP studies areas and promotes the bidding rounds according CNPE approval.

20082008 20092009

Bill 5.938/2009 for the Pre-Salt

areas

Institutional Evolution Institutional Evolution O&G sectorO&G sector

Pre-salt IM group

ProductionOil e LGN – 2,03 million bbl/dayGas – 57,9 million m3/day

Imports/Exports Balance

Oil – 132,5 thousand bbl/dayGas – 23,5 million m3/day

Proven Reserves(*)Oil – ~13 billion bblGas – ~366 billion m3

Current scenarioCurrent scenario(2009)(2009)

(*) without pre-salt discoveries(*) without pre-salt discoveries

Concession Contracts:Concession Contracts:

Exploratory PhaseExploratory Phase377 blocks (JUN/2010)

Production PhaseProduction Phase368 fields

304 operated by Petrobras

Current scenario Current scenario Concession contractsConcession contracts

38 sedimentary basins38 sedimentary basins

29 principal basins29 principal basins

7,5 million km7,5 million km22

Marlim FieldMarlim Field

Marlim Field:

discovered in 1985 in 835m water depth

Production (DEC/2008): 345 thousand bbl/day

Royalties: R$ 2.15 billion

Special Participation: R$ 4.84 billion

Government Take ~54% (2008)

Proven Reserves (DEC/2008):

1,7 Billion bbl

The Pre-Salt as a New ParadigmThe Pre-Salt as a New Paradigm

Pre-Salt AreaPre-Salt AreaThe study of the Interministerial GroupThe study of the Interministerial Group

2-ANP-1-RJS

2-ANP-2-RJS

Exploratory Rounds (Rounds)

0

1

2

3

4

5

6

7

9

Fields producing/under developmentPre-Salt Polygon (Bill of Law 5.938/2009)

Oil and GasGas

OilWells being drilled (APR/2010)

Pre-Salt Area

Dry well

Production-sharing agreements for E&P in the unlicensed Pre-Salt areas (PL 5.938/09);

Creation of a new state company – Pre-Sal (PL 5.939/09);

Formation of a Social Fund (PL 5.940/09);

Onerous assignment of rights, which shall grant Petrobras the right to produce in certain areas of the Pre-Salt, up to 5 billion boe (PL 5.941/09).

New Regulatory FrameworkNew Regulatory Framework

New rules for E&P in the Pre-Salt area: New rules for E&P in the Pre-Salt area: Four (04) Bills Four (04) Bills

ObjectiveObjective: :

Increase the Brazilian Society benefit on the pre-salt E&P.

Main Rules:Main Rules:

Brazil shall adopt the Production Sharing Contract in the Pre-Salt Area;

Petrobras shall be the only operator in this area with at least 30% participation;

Opportunities in the pre-salt area shall be bidden considering Petrobras as the Operator;

The winner shall be the one who offers the biggest share of oil production to the State;

A New State Company shall run the State share of the contract;

Petrobras can be contracted without a bidding process;

ANP provides the bidding rounds and regulates the contracts.

Production Sharing ContractProduction Sharing ContractBill n. 5.938/09Bill n. 5.938/09

Senate approval on 06/10/2010Senate approval on 06/10/2010

General FeaturesGeneral Features

Pre-Salt Social FundPre-Salt Social FundBill n. 5.940/09Bill n. 5.940/09

Senate approval on 06/10/2010Senate approval on 06/10/2010

Social Fund shall carry out investments in Brazil and abroad in order to diversify the risk and avoid the problems of the “Dutch disease”

Investments shall follow solidity criteria: liquidity, risk classification and diversification, expected return

Investments in Brazil may be used in infrastructure projects

Financial institutions may be hired to act as operating agents

Investment PolicyInvestment Policy

The Social Fund shall use the resources generated by the production-sharing contracts in reducing poverty; education; culture; science and technology; environmental sustainability.

The revenue of the Social Fund will come from the sale of profit oil, from the signature bonus and from the royalties destined to the Federal Government.

The New State CompanyThe New State Company Bill n. 5.939/09Bill n. 5.939/09

Shall have a qualified technical staff, but shall NOT be an operator;

Participates in the PSC on behalf of the Brazilian Government;

Shall have casting vote, according to the contract.

New State CompanyNew State Company

Lower Court approval on 11/18/09

Authorization to assign to Petrobras the right to explore and produce oil and gas up to 5 billion boe, in selected areas not yet under contracts;

Onerous AssignmentOnerous AssignmentBill n. 5.941/09Bill n. 5.941/09

Objective:Objective:

Petrobras capitalizationPetrobras capitalization

Authorization to subscribe and pay in new shares of Petrobras’ joint stock.

Senate approval on 06/10/2010Senate approval on 06/10/2010Senate approval on 06/10/2010Senate approval on 06/10/2010

The decision of drilling wellsThe decision of drilling wells to increase pre-salt value to increase pre-salt value

Franco2-ANP-1-RJS

Exploratory Rounds (Rounds)

0

1

2

3

4

5

6

7

9

Fields producing/under development

Pre-Salt Polygon (Bill of Law 5.938/2009)

Óil and GasGas

Oil

Wells being drilled (APR/2010)

Sísmica 2D Conf NoExc Pos

Sísmica 2D Conf Exc Pos

Sísmica 3D Conf NoExc Pos

Sísmica 3D Pub Exc Pos

Área de Exclusão

Limite TAC (perfuração)

Área pré-sal (PL 5.938/09)

2D Seismic Conf NonExc Pos

2D Seismic Conf Exc Pos

3D Seismic Conf NonExc Pos

3D Seismic Pub Exc Pos

Exclusion Area

TAC Limit (drilling)

Pre-Salt Area (PL 5.938/09)

Libra2-ANP-2-RJS

2-ANP-1-RJS

The decision of drilling wellsThe decision of drilling wells to increase pre-salt value to increase pre-salt value

2-ANP-2-RJS

3D structural map of the salt base as interpreted by the ANP technical staff (2010)

Franco discoveryFranco discovery(2-ANP-1-RJS)(2-ANP-1-RJS)

Forecasted Forecasted Recoverable Volume Recoverable Volume

4,5 Bi bbl4,5 Bi bbl

Fonte: PETROBRAS, 2009

Brazilian OpportunitiesBrazilian OpportunitiesPre-salt Campos & Santos BasinsPre-salt Campos & Santos Basins

(50 billion barrels ?)(50 billion barrels ?)

If proven the way ANP forecasted, Brazil will need to If proven the way ANP forecasted, Brazil will need to invest heavily in infrastructure (platforms, pipelines, oil invest heavily in infrastructure (platforms, pipelines, oil

pipelines, ports, ships, steel, etc.).pipelines, ports, ships, steel, etc.).

In a 1In a 1stst step Brazil considers to hire 40 rigs and semi- step Brazil considers to hire 40 rigs and semi-submersible platforms, 234 ships, including 70 large submersible platforms, 234 ships, including 70 large

ones ones (Lima, 2008)(Lima, 2008)

Santos BasinSantos Basin

Campos BasinCampos Basin

Brazilian OpportunitiesBrazilian OpportunitiesNew Bidding RoundsNew Bidding Rounds

After the approval of the After the approval of the Pre-salt bills ANP shall bid:Pre-salt bills ANP shall bid:

Pre-salt areas under PSCPre-salt areas under PSC (~ 2,3% sedimentary area)(~ 2,3% sedimentary area)

Other areas under Other areas under concession contracts concession contracts

(> 97% sedimentary area(> 97% sedimentary area))

ANP waits for ANP waits for CNPE CNPE approval the 11th Bid approval the 11th Bid

Round; Round;

The 11The 11th Bid Round shall th Bid Round shall focus on the Brazilian focus on the Brazilian

equatorial margin.equatorial margin.

Final RemarksFinal Remarks

The Pre-Salt is a new paradigm in Brazil;The Pre-Salt is a new paradigm in Brazil;

Production-sharing contracts shall be applied for the Pre-Salt area Production-sharing contracts shall be applied for the Pre-Salt area (around 2% of the Brazilian sedimentary area);(around 2% of the Brazilian sedimentary area);

Concession contracts shall be applied for ALL other areas (> 97%);Concession contracts shall be applied for ALL other areas (> 97%);

ANP waits for CNPE approval to promote the 11º bid-round focusing the ANP waits for CNPE approval to promote the 11º bid-round focusing the equatorial margin;equatorial margin;

And to promote a bid round focusing pre-salt opportunities;And to promote a bid round focusing pre-salt opportunities;

In Brazil, opportunities go far beyond the pre-saltIn Brazil, opportunities go far beyond the pre-salt..

Agência Nacional do Petróleo, Gás Natural e Agência Nacional do Petróleo, Gás Natural e

BiocombustíveisBiocombustíveis

Av. Rio Branco, 65Av. Rio Branco, 65

12º ao 22º andar12º ao 22º andar

tel. 21 2112-8100 tel. 21 2112-8100

www.anp.gov.br

Oil Price EvolutionOil Price Evolution

Govern Take Evolution (2002 – 2007)

Brazil – 60% GT

0% 10% 20% 30% 40% 50% 60% 70%

Brasil

Govern Take around the worldGovern Take around the world