Perspectives for the Brazilian Petroleum Sector After the Transition from Petrobras Monopoly to a Competitive Environment Ivan Simões Filho [email protected].

Perspectives for the Brazilian Petroleum Sector After the Transition from Petrobras Monopoly to a Competitive Environment

Ivan Simões [email protected]

Gaffney, Cline and Associateswww.gaffney-cline.com

UNCTAD IX Rio, June 8, 2004

NOT AN OFFICIAL UNCTAD RECORD

Gaffney, Cline & AssociatesGaffney, Cline & Associates

GCA Worldwide PresenceGCA Worldwide Presence

Caracas

Buenos Aires

Rio de Janeiro

UK

Houston

Singapore

Sydney

Calgary

Abu Dhabi

Moscow

Representation

Malaysia


Midstream

• Petroleum Engineering

• Process Engineering

• Operations

Upstream

• Geophysics• Geology• Petrophysics• Reservoir Eng.• Drilling Eng.

Downstream

• Chemical Eng.

• Power Eng.• Economics• Finance, Law• Strategy

GCA Full Spectrum StaffGCA Full Spectrum Staff


• Company started in Latin America in 1962

• High degree of activity in all countries and knowledge/ understanding of local issues

• Fulltime staff comprises professionals from Argentina, Brazil, Colombia, Mexico, Trinidad & Tobago and Venezuela

BRAZIL

COLOMBIA

VENEZUELAGUYANA

SURINAMEFRENCH GUIANA

PERU

BOLIVIA

PARAGUAY

CHILE

ARGENTINA

URUGUAY

GCA in Latin AmericaGCA in Latin America


Open to Foreign Investment in the Energy Sector

Closed to Foreign Investment in the Energy Sector

Some Foreign Investment in the Energy Sector

The 1980s WorldThe 1980s World


Today’s World …. Today’s World …. is Getting Biggeris Getting Bigger

Open to Foreign Investment in the Energy Sector

Transition Toward Total Opening of the Energy Sector to Foreign Investment

Closed to Foreign Investment in the Energy Sector

Some Foreign Investment in the Energy Sector


An Impressive Production GrowthAn Impressive Production Growth

Brazilian Production (million boepd)

0.00

0.50

1.00

1.50

2.00

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

Brazil is the 15th world oil producer

Source: Petrobras


A Growing Gas MarketA Growing Gas Market

But still a small proportion of the energy matrix

Gas Consumption (bcfd)

0

200

400

600

800

1,000

1,200

1,400

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

Source: Ministry of Mines and Energy


Growing Gas ProportionGrowing Gas Proportion

Natural gas participation grew 15% in 2002

Source: Ministry of Mines and Energy

Brazil Energy MatrixOther2.5%Sugar cane

12.8%Wood and

vegetable coal11.9%

Natural gas7.5%

Mineral coal6.6%

Nuclear1.9%

Hydro13.6%

Oil and oil products43.1%


Some Natural Gas IssuesSome Natural Gas Issues

• Bolivia-Brazil gas pipeline is still operating with spare capacity– 20,000,000 m3/day

• 36,000,000 m3/day average consumption• Significant gas discoveries in several basins• Recent power shortage in Northeastern region

– Thermal plants could not operate due to gas shortage

– Need to link regional gas pipeline networks


Growing Use of Bolivia-Brazil Gas PipelineGrowing Use of Bolivia-Brazil Gas Pipeline

Bolivia-Brazil Gas Pipeline (MM m3/d)

0

5

10

15

20

1999 2000 2001 2002 2003

Currently using 2/3 of its capacity


Three Separate Gas Pipeline NetworksThree Separate Gas Pipeline Networks

Source: Petrobras


13 Years of Reserve Growth13 Years of Reserve Growth

Reserves (MMboe)

0

2

4

6

8

10

12

14

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

356% reserve replacement in 2003

Source: Petrobras


Impressive Reserves GrowthImpressive Reserves Growth

• 2.3 billion boe proved• >4 billon boe proved + probable• 400 million bbl light oil• 365% reserve replacement


Towards Self SufficiencyTowards Self Sufficiency

Brazil produces today 85% of its petroleum consumption

Oil Production Versus Consumptiom (Kbopd)

0200400600800

1,0001,2001,4001,6001,8002,000

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

Consumption

Production

Source: Petrobras


Important Discoveries in 2003Important Discoveries in 2003

• Golfinho – BES-100 Block, Espírito Santo Basin– Light oil (>40 API)

• Baleia Franca – BC-60 Block, Campos Basin – Heavy oil (19 API)

• Mexilhão – BS-400 Block, Santos Basin– Gas and condensate

Gaffney, Cline & AssociatesGaffney, Cline & AssociatesSource: www.petrobras.com.br

The Whale ParkThe Whale Park


JubarteJubarte

• Discovered Jan 2001– 1-ESS-100 well– 1323 m water depth– 77 Km from coast– 17 API

• Pilot Production: 21,000 bopd– Long term production test:

October 2002– Declaration of Commerciality

on December 11, 2002– ESS-110H well (1076m in

reservoir)– FPSO Seillean

• Development Phase 1: 45,000 bopd– 4 producing wells– First oil 2005– FPSO P-34

• Development Phase 2: 150,000 bopd– 21 producing wells, 6

injectors– First oil 2008

Source: Petrobras


CachaloteCachalote

• Discovered November 2002 (ESS-116 well)– 1478 m water depth– 80 km from coast– 19 API

• Eocene turbidites • Declaration of commerciality December 27, 2002• One phase development

– FPSO– 10 wells (6 producing, 4 water injection)

Source: Petrobras


Radical Change in Round 5Radical Change in Round 5

Number of Blocks Offered

0

200

400

600

800

1000

Round 1 Round 2 Round 3 Round 4 Round 5 Round 6

Source: www.brasil-rounds.gov.br


Decreasing Proportion of Decreasing Proportion of Awarded BlocksAwarded Blocks

% Blocks Awarded

0%

20%

40%

60%

80%

100%

Round 1 Round 2 Round 3 Round 4 Round 5



Decreasing CompetitionDecreasing Competition

Number of Companies

0

5

10

15

20

25

30

Round 1 Round 2 Round 3 Round 4 Round 5

Bidders

Winners



From State Monopoly to a Competitive From State Monopoly to a Competitive Exploration EnvironmentExploration Environment

Net Exploration Acreage

El Paso8%

Shell6%

Agip4%Devon

3%

Wintershall3%

Maersk3%

Repsol YPF2%

Esso2%

BP Amoco2%Statoil

2%

ChevronTexaco2%

Petrobras49%

Amerada Hess2%

ConocoPhilips2%

Queiroz Galvão2%

Others8%

Source: ANP


33 Exploration Concessionaires33 Exploration ConcessionairesContract Count

(including Round 5)

54

10 9

6 6 5 5 4 4 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1

-

10

20

30

40

50

60

Pet

robr

as

She

ll

El P

aso

Rep

sol Y

PF

Mar

ítim

a

Que

iroz

Gal

vão

Par

tex

Agi

p

Che

vron

Tex

aco

Dev

on

Pet

roga

l

Sta

toil

Mae

rsk

BG

Ess

o

Win

ters

hall

Aur

izôn

ia

Am

erad

a H

ess

Con

ocoP

hilip

s

Pet

rose

rv

New

filed

BH

P

BP

Am

oco

EnC

ana

Ipira

nga

Ker

r M

cGee

Pet

roR

ecôn

cavo

Pot

ióle

o

Sam

son

SK

Sta

rfis

h

Tot

alF

inaE

lf

Uno

cal

Source: ANP


ConclusionsConclusions

• Very prospective areas– Need persistence– New plays

• All types of opportunities– Light oil– Heavy oil– Gas and condensate– Mature basins

• Need for infrastructure– Refining – Pipelines

• Huge market• Stable macro economy


Thank youThank you

Perspectives for the Brazilian Petroleum Sector After the Transition from Petrobras Monopoly to a Competitive Environment Ivan Simões Filho [email protected].

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