opportunities in the brazilian oil & gas industry · current rf final rf. onshore goal: to...

Opportunities in the Brazilian Oil &

Gas Industry

Dirceu Amorelli

Director

J u n e 1 2 t h , 2 0 1 9

NOTICE

• The ANP´s institutional presentation is based on currentand reliable information, but no representation orwarranty is made as to its accurateness andcompleteness, and it should not be relied upon as such.

• Projections and estimated values are included withoutany guarantee as to their future realization.

• Forward-looking data, information, projections andopinions expressed during the presentation are subjectto change without prior notice.

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Open Acreage Process.

02

Upcoming Licensing Rounds

03

Conclusions

04

Outline

Oil and Gas Scenario

Improvements

Opportunities

Final Remarks

Oil and Gas Scenario

Final Remarks

Improvements

Rounds

01

02

03

04

Outline

OnshoreConventional

Offshore Onshore Pre-SaltConventional

Offshore

Pre-SaltPolygon

5.0 million km2 – onshore

2.5 million km2 – offshore

7.5 million km2

Concession

• 424 fields

• 322 blocks

Production Sharing

• 4 fields

• 7 blocks

Three different E&P environments

Less than 5%of the sedimentary areas are

contracted

97 Groups

• 47 Brazilian

• 50 foreign

Goal: to attract the right players for each environment

Pre-salt Conventional Offshore Onshore

Supported by oilfield service companies, suppliers and financial institutions

The right players

Home to the largest offshore oil

discoveries in the last decade

The next bidding rounds will offer blocks with

potential for giant discoveries in the pre-salt

Proved reserves

~8 billion barrels of oil

Pre

-Sal

t p

rod

uct

ion

gro

ws

shar

ply

in t

he

sho

rt t

erm

Conventional Offshore

Goal: to increase

explorationactivities in the East

and Equatorial

Margins.

Current RF

Final RF

Onshore

Goal: to revitalize activities in onshore fields, by attracting

mature field players

Brazil has potential to significantly increase its onshore

production in short/medium term

Oil

Gas

Onshore Production (2018)

111Thousand bbl/d

22Million m³/d

Production Perspective

In 2018, 67,000 wells were drilled onshore

around the world

Only 128 wells were drilled onshore in

Brazil

0

500000

1000000

1500000

2000000

2500000

3000000

Bar

rels

of

Oil

per

day

Average Production

Brazil Pre-Salt Post-Salt Offshore Onshore

34%

Production

3.3 Million

Pre-Salt

57%

Conventional Offshore

38%

Onshore

4%

Oil

2.59 Million bpd

Gas

109 Million m³/d

boe/d

April, 2019

9th largest producer in the world in 2018

The largest producer of crude oil in the whole South American regionApril, 2019

190%(2014/2018)

(2014/2018)

34%(2014/2018)

15%(2014/2018)

Proven

Reserves

15 Billion

Oil

13.2 Billion bbl

Gas

368Billion m³

December, 2018

boe

4%

28%

68%

Oil Proven Reserves

Onshore Conventional Offshore Pre-salt

19%

29%

52%

Gas Proven Reserves

Onshore Conventional Offshore Pre-salt

Production Scenario: need to attract investmentsMaximize Recovery Factor

Campos Basin

Current O&G Recovery Factor 14%

Final O&G Recovery Factor 23%

Brazil World

Final O&G Recovery Factor 21% Average Final O&G Recovery Factor 35%

1% addiction in Campos Basin:970Mboe (New Reserves)

1% addiction in onshore:200Mboe (New Reserves)

Final Remarks

Rounds

Improvements

01 Oil and Gas Scenario

02

03

04

Outline

Policymaking

Regulation and Policy implementation

PRESIDENT OF THE REPUBLIC

National Energy Policy Council - CNPE

Brazilian Oil & Gas System Structure

02

New Laws for

E&P

From 2016 up to today

48

New CNPE

Resolutions for

E&P

Law 13,365/2016

Petrobras is no longer

required to be the sole

operator of Pre-Salt.

The change allows Petrobras

to decide to act as an

operator and hold a

minimum of 30% (thirty

percent) in the consortia

formed to operate blocks in

the PS regime.

Optional Operation

Nov/2016 – Law 13,365

New Operators in PS regime

Extended the special tax regime for exploration,

development and production of oil and natural gas

Repetro Extension –Fiscal Regime

Dec/2017 – Law 13,586

Improvements in the Energy Policy

CNPE Resolutions 10/2017

and 10/2018

Established guidelines for

multi-year planning of E&P

Bidding Rounds up to 2021

Bidding PlanningCNPE Resolution 17/2017

ANP Ordinance 749

Royalties reduction, up to 5% (five

percent), on incremental

production resulted by new

investment plan to be

implemented, in order to promote

life extension and maximize field’s

recovery factor

Royalties ReductionCNPE Resolutions 04 and

08/2017

It allows the extension of the

Exploration Phase, considering not

only the contractual clauses, but

also the greater objective of

national interest and the

preservation of investments in the

Country.

ExploratoryPhase Extension

CNPE Resolution 2/2016

Established the guidelines for the

concession contracts extensions

The Concessionaire may apply for

extension upon submission of a

request to ANP, together with a

reviewed Development Plan

Contract Extension


ANP Ordinance 726

Established the guidelines for the

concession contracts extensions

The Concessionaire may apply for

extension upon submission of a

request to ANP, together with a


Local Content

ANP Ordinance 785/2019

Farm-in and Farm-out Process

and Reserve Based Lending

Assignment of Agreements and RBL


The ANP may conduct permanent

offers of fields or blocks returned

to the Union or offered in past

bidding rounds but not awarded

Open Acreage


Established the guidelines

for the concession contracts

extensions

The Concessionaire may

apply for extension upon

submission of a request to

ANP, together with a


Contract Extension

9 extensions approved

56 currently in analysis

and

Offshorei. Marlim;ii. Marlim Leste;iii. Marlim Sul;iv. Frade;v. Voador;vi. Ubarana.

~ US$ 18 Bi

Onshorei. Fazenda Alegre;ii. Araçás;iii. Canto do Amaro.

~ US$ 945 MM

Offshorei. 12

Onshorei. 44

Exploratory Phase Extension

Several concessionaires operating in Brazil, mainly in blocksrelated to the 11th and 12th Bidding Rounds, due to difficultiesrelated to environmental licensing and deficient logistics in someof the offered Basins, have requested ANP to extend of theexploratory phase to carry out the minimum exploratoryprogram.

The ANP Ordinance allows the extension of the ExplorationPhase for a period of two (2) years

40 Extensions Approved

Out/2017 –ANP Ordinance 708

2017

2018

2019

Predictability for the Oil Market

2020

2021

Brazil16ª Round 6

Brazil14ª Round

7Brazil17ª Round

Brazil18ª Round 8

Bidding Planning

To be confirmed:

Royalties Reduction


Royalties reduction, up to 5% (five

percent), on incremental production

resulted by new investment plan to

be implemented, in order to

promote life extension and

maximize field’s recovery factor.

Set/2018 –ANP Ordinance 749

Royalties Reduction up to 5% on Incremental Production

in Mature Fields. What is Mature??

25 years of ProductionProduction Cumulative ≥70% of

estimated recovery considering 1P reserves

OR

241Number of Eligible Fields:

53% of Brazilian Fields

54% of Campos Basin Fields

Royalties Reduction up to 5% on Incremental Production in Mature

Fields.

Promote Field Life Extension

Maximize Recovery Factor

Increase project Profitability

More Jobs and Income

Increase Mature Fieldsattractiveness

10% Royalties

7,5 or 5% Royalties

HistoricalComplementary

Project

Royalties Reduction

40 cases under evaluation

Open Acreage

Continuous offer of blocks and mature fields

Single registration

Single participation rate with reduced value

Complete technical data package will be optional

Reduction of the financial guarantee for the Minimum Exploratory Program– 30% of the total amount

Reduced signature bonus for mature basins (R$ 50,000)

Open Acreage

Objective

Extend knowledge of the basins and

reserves

Increase the numbers ofservices companies

Decentralize exploratory

investment in the country

Increase the number of O&G players

Bring opportunities to companies of different profiles and

sizes

Technicaland

EconomicalParameters

Companiesstudies

Enrollment

Declarationof interest

Disclosure ofna interest

and thebidding

schedule

Deadline for new

enrollments

Offersubmition

(public session)

Open Acreage Cycles

Awarded Blocks

Qualification andBidding Homologation

Signuture of thecontract

CNPE Resolution 01

It defines guidelines for the

ANP to evaluate the

possibility of adopting Local

Content requirements

distinct from those

established in the signed

Contracts

New LC Policy

Mar/2018 –CNPE Resolutions 01

This Resolution establishes the criteria, requirements andprocedures applicable to the reduction or even the exemption ofthe Local Content obligation, as well as the general rules ofcompromised percentage adjustments and surplus transfers.

It gives operators the possibility of making a contractualamendment.

233 Contractual Amendments Signed

285 cases under evaluation

Mar/2018 –ANP Ordinance 726

The rights arising from the E & P contracts,

including the contractual

position, may be given as

guarantee as long as there is no risk to fulfill the contractual

obligations,

Rules offering legal certainty and predictability as regards the creation,

improvement and enforcement of guarantees.

It does not require prior notification or consent of the ANP,

but the standard indicates clauses that are prohibited in the

instruments

Clarity about the role of the ANP in the

analysis of contracts and their effects.

Expectation that this modality

mainly facilitates the sale of

mature fields, contributing to the increase of

investments and the recovery

factor of production in

Brazil.

Assignment of Agreements and Reserve Based Lending

Final Remarks

Opportunities

Improvements

01 Oil and Gas Scenario

02

03

04

Outline

What´s up for 2019?

2019

2020

ANP Ordinance Update:

Descomissioning(public consultation)

Petrobras Divestment Plan

(Topázio and Ártico Projects):

first farm-ins/farm-outs

Approvals

May/2019

Jul/2019

2ndS/2019

2ndS/2019

2ndS/2019

New ANP Ordinance:

Assignment of

Agreements and

Reserve Based Lending(publication)

New Areas(publication)

Bidding Rounds Calendar

Open AcreagePetrobras Divestment Plan

Unique E&P Opportunity

Improvements in the energy policy, resolutions and contracts

Variety of opportunities to attract the right players

Open Acreage

600

(approved)

+1.139

Blocks

+14Marginal

fields

20Sedimentary

basins

527 approved blocks in 8 onshore basins

73 approved blocks in 5 offshore basins

Blocks not awarded in the 15th Bidding Round are

included

A set of blocks are

being offered in the

neighborhood of assets under

Petrobras´ divestment

plan

GOAL

16th Bidding Round

SANTOS

Minimum Bonuses vary from:

$ 375 M up to 325 MM

12 blocks in New Frontier

24 blocks in High Potential

Basin

36Blocks

Camamu, Jacuípe, Pernambuco,

Campos and Santos.

5Basins

Estimated unrisked oil in place

volume (P50)

111 Bbbl

16th Bidding Round

SANTOSCAMPOS


$ 375 M up to 325 MM



Basin

36Blocks


Campos and Santos.

5Basins


volume (P50)

111 Bbbl

16th Bidding Round

SANTOSCAMPOS

Camamu-Almada


$ 375 M up to 325 MM



Basin

36Blocks


Campos and Santos.

5Basins


volume (P50)

111 Bbbl

6th Pre-salt Bidding Round


volume

42 Bbbl

Pre-Salt Play

5Blocks

Potential for a large oil discovery

Bonuses vary from:

$ 125 MM up to 1,2 B

Minimum Profit Oil vary from:

22,87% up to 36,98%

183 Fields92% Mature Fields

4625%

13775%


Offshore Fields(44 are mature)

3270%

1430%

Underproduction

12188%

1612%

Onshore Fields(125 are mature)

Underproduction

Unique Opportunity to revitalize activities in

onshore and shallow water fields, by attracting

mature field players and…

Brazil has potential to significantly

increase its onshore and shallow water

production in short/medium term

~30%

(2012/2018)

0% 10% 20% 30% 40%

SEAL

Espírito Santo

Recôncavo

Potiguar

Onshore Recovery Factor per basin

Current RF Final RF


Development drilling has declined

75% in the last 5 years~75%(2015/2017)

The production has declined 30% in

the last 5 years

(2012/2018)

0% 10% 20% 30% 40%

SEAL

Espírito Santo

Camamu

Campos

Santos

Potiguar/Ceará

Offshore Recovery Factor per basin

New Reserves

Current RF Final RF

Increase production and the recoveryfactor of the mature basins (specially in Campos

basin).

Rounds

Improvements

Oil and Gas Scenario01

02

03

Conclusions

04

Outline

Final Remarks

Potential investments and forecast production

The pre-salt region has the potential to

contribute with the largest non-OPEC

production growth in the decade to come.

Brazilian Oil Production Forecast (MM boe/d)

11New platforms

The greatest transformation in the Brazilian E&P sector, completing the opening which started in 1997

Diverse and Competitive E&P Market

Petrobras

divestment plan

Bidding round

schedule and

open acreage

Need of

additional service

companies

Improvements in

the energy policy

O&G scenario in 2019

Unique E&P opportunity:

- immediate reserves certification

- fast production development

- reserves and production growth

Development of a diverse and

competitive supply chain and

services market

National Agency for Petroleum, Natural Gas andBiofuels – ANP

Av. Rio Branco, 65, 21st floorRio de Janeiro – Brazil

Phone: +55 (21) 2112-8100

Additional Information:

www.anp.gov.br

http://www.anp.gov.br/

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