With the new agreement, Total and petrobras will strongly reinforce their technological cooperation in the areas of geoscience, subsea systems and joint studies in areas of mutual interest, aiming to reduce investment risks and increase the probability of exploratory success over the next years. The companies will also become partners in the Iara and Lapa fields, in the pre-salt Santos Basin, and in two thermal plants, sharing the use of the regasification terminal infrastructure in the state of Bahia.
The multinationals also expand their joint activities outside Brazil. Petrobras will have the option to take a stake in the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico.
The total value of the pacts announced today is estimated at $ 2.2Bn.
This amount includes cash payments , contingent payments and the investments in production development of common assets by both companies. The 2.2Bn will be paid by Total to Petrobras and its subsidiaries as appropriate.
The signing of the relevant sale and purchase agreements (SPA) related to the assets from this Master Agreement is subject to internal and external control and regulatory approvals, including the Brazilian Federal Accounting Court (TCU), potential preemptive rights from the current partners of Iara, plus other precedent conditions. The companies have a mutual commitment to make all the necessary efforts to sign all the contracts needed to develop the agreements within the next 60 days.
The contracts inked today build on the MOU signed by both companies in October 2016.
Main terms and conditions of the agreements inked today
1.- The sale of a 22.5% interest to Total, in the Iara area (Sururu, Berbigão and West of Atapu fields) in Block BM-S-11.-Petrobras will remain the operator and will keep the largest stake in that consortium, with a 42.5% interest.
2.- The sale of 35% interest to Total in Lapa field in Block BM-S-9, with transfer of the operation to Total.- Petrobras will retain a 10% interest in this concession.
3.- Petrobras’ option to take a 20% participation in block 2 of the Perdido Foldbelt area in the Mexican portion of the Gulf of Mexico.- Acquired by Total in partnership with Exxon in the round of bidding held by the Mexican government on 12th May 2016
4.- Shared use of the Bahia regasification terminal, with a capacity of 14 million m3/day.
5.- Partnership, with Total holding a 50% stake, in the thermal plants Rômulo de Almeida and Celso Furtado, located in Bahia, with energy generation capacity of 322 MW.
6.- Joint studies in the exploratory areas in the Equatorial Margin and in the southern area of Santos Basin, taking advantage of the existing synergy between the two companies, since each has outstanding geological knowledge of the oil basins located on both sides of the Atlantic.
7.- Technological partnership agreement in geological processing and subsea engineering, in which the companies have complementary knowledge, which can boost the gains from the application of new technologies in the partnership areas.
Gas and Energy: The thermal pact
In the case of the G&E area, Petrobras and Total are forming an innovative partnership in the Brazilian thermal market. The initiative is aligned with the strategies of Petrobras for the Gas and Energy segment in the 2017-2021 Business and Management Plan, which establishes the restructuring of the Energy Businesses and maximizes the value generated in the gas chain.
This vision considers a regulatory evolution, that is already under discussion with Brazilian federal authorities, forecasting an improvement of the procurement rules, access to the pipeline network and LNG regasification terminals.
The partnership with Total includes two thermal plants (Rômulo Almeida and Celso Furtado), connected to the Regasification Terminal located in São Francisco do Conde, in Bahia.
Upstream
In the Iara concession, Petrobras holds a 65% interest and is the operator. Shell, with 25%, and Galp with 10%, are partners in this area, which is part of Block BMS-11. The reservoirs of this concession have higher complexity and are in the production development phase.
The partnership with Total in this area will bring benefits such as the release of investments and new technological solutions for its development, maximizing profitability and the volume of oil to be recovered.
The limits of this consortium extend into the Surrundings of the Lara area, from the Transfer of Rights agreement, in which Petrobras holds a 100% interest. The fields Berbigão, Sururu and West of Atapu must enter into Individualization Production Agreements (unitization) with this area of the Transfer of Rights.
In the Lapa field, Petrobras holds a 45% interest and is the operator. Shell, with 30%, and Repsol with 25%, are partners in this field, which is part of BM-S-9 block. The development of the Lapa field is at an advanced stage, with the recent start of production, as announced on 12/20/2016, and presents geological characteristics and oil quality different from other pre-salt fields. Total, as future operator of this field, will bring benefits to the consortium, by incorporating its experience and knowledge in the continuity of its development plan.
The technological partnerships in the Iara and Lapa areas will develop and apply certain subsea technologies in a pioneering manner in Brazil. The efforts to reduce risks and increase the probability and the success in exploration will rely on a 4D seismic application in the context of carbonate reservoirs, with specific studies on CO2 migration and geomechanical studies, in addition to the development of a methodology for the construction of models to support investment decisions.
Image over the headline.- Pedro Parente (President of Petrobras) and the President of Total, Patrick Pouyanné, during the press conference after signing the agreement in connection with the Strategic Alliance established in the Memorandum of Understanding signed in October 2016. © Petrobras News Agency.
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