Petrobras to launch fresh floater tenders

Speaking to Upstream in an exclusive interview, exploration and production director Solange Guedes addressed the issue of which tenders will come next for Petrobras.

The Brazilian giant is probably still the most active deep-water operator in the cost-constrained oil world, despite its own cutbacks.

“Sepia and the Libra pilot are already out there. Our business plan also states that 2020 is the year for first oil from the Marlim revitalisation unit and for Buzios-5, so plainly these will need to come out too,” she said, referring to the new Petrobras business plan that pins down 2020 first oil dates for all four of those big floating production, storage and offloading vessels.

The Libra floater is currently undergoing a re-bid with reduced local content requirements, but a similar step for Sepia, where Petrobras has a 100% interest, is taking longer.

However, Guedes rebuffed industry speculation about a decoupling between the two processes.

“The Sepia tender is moving a bit more slowly, because it is governed by public contracting rules. On the other hand, Sepia is a less complicated vessel, from the technical viewpoint.

“They are both due to enter production in 2020 and both have a key contracting milestone in the first half of 2017, so missing this would affect our production curve. They won’t be awarded on exactly the same day, but the timing is parallel,” Guedes said.

The Libra pilot and Sepia unit both have capacity for 180,000 barrels per day of oil, though the former will have twice as much gas handling capacity, at 12 million cubic metres per day.

The Buzios-5 floater will be closely modelled on sister units such as the P-74 and P-76 — now starting their integration projects in Brazilian yards — with capacity for 150,000 bpd and 7 MMcmd of natural gas, while Marlim-1 will be smaller, handling up to 100,000 bpd.

The Buzios-5 and Marlim-1 units will also have lower demands for minimum local content than seen in recent years, in line with the new Petrobras policy on this matter.

The trend can be seen in the new tender for Libra that removes minimum requirements for numerous categories, including all aspects of the hull.

For topsides fabrication and installation, the Petrobras-led Libra consortium retained requirements ranging from 23% for fabrication to 27% for engineering and 32% for materials. Mooring has the highest requirement at 40% for hook-up and 85% for the anchorage system. There is no overall local content requirement.

However, Guedes dismissed suggestions the Libra consortium might select a second unit, if prices were attractive enough.

She said the consortium partners were exploring the possibility of installing equipment capable of stripping out and reinjecting carbon dioxide, rather than simply re-injecting all gas as on the Libra pilot.

“The technical aspects of this are being analysed, but this will not be contracted from the same tender because it is not going to be the same. The specifications for the two units are not the same,” she said.

The Libra-2 unit is due to enter production in 2021, as is a Marlim-2 unit, so these tenders are not far away, Guedes said.

On the prospects of obtaining waivers from local content demands for the Libra pilot, Guedes noted that the mechanism is “not fully mature” in terms of regulation.

“The rules on waivers are not fully clear, so the consortium has been gathering information and has contracted an independent company to attest to any assertions over the feasibility of complying with local content.

“The gap in regulation means there needs to be more interaction between (regulatory agency) the ANP and the consortium, and that has already started.

“The ANP has stated its position and asked for more information on some matters, and we are now moving to a more detailed phase, with our explanations,” she said.

Guedes said the federal government’s representative in the production sharing entity has effectivey endorsed the consortium’s view.

“There is a shared vision on local content compliance. This was very significant for us,” she said.

Petrobras chief executive Pedro Parente made his feelings clear this week when he referred indirectly to Libra in a forum with Sao Paulo industrialists.

“(Local content) policies have done no service to Brazil... I will give you an example. We tendered for a platform and, as a result of local content, the price came back 40% (higher) than our estimates,” he said, referring to a dayrate of more than $1 million per day.

Petobras is also stepping up its partnership push and is understood to be lobbying for a change in law that would allow the company to share some of the risk on the rights transfer area where Buzios and Sepia are located. This risk has pushed up financing costs for potential bidders on Sepia.

A change in the law would almost certainly be supported by the new administration of President Michel Temer, but talk of such a shift is not encouraged with municipal elections just around the corner.

Stil, Petrobras managers, like Guedes, see partnership as a natural and fundamental part of their job.

“Mitigating risks is why exploration and production is carried out by consortia all over the world. It is not wise to put all your eggs in one basket. Conceptually, it would be good to have partners in the rights transfer area.

“We cannot do this today, by law, so we are focusing on doing what is within our power to improve the conditions for investment,” Guedes said.