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Total, Petrobras form exploration pact

By  Elaine Maslin Thursday, 22 December 2016 13:25

Total and Petrobras have agreed to work together on exploration and upstream technology, which will see Total become a partner on two pre-salt licenses in the Santos Basin.

Image from Total.

The licenses are the BMS-11 license, with the Iara fields currently under development, and BMS-9, containing the Lapa field, which recently started production. Total will get 22.5% interest in BMS-11 and 35% and operatorship in BMS-9.

In return, Total will offer to Petrobras the option of taking a 20% stake in the Perdido Belt deepwater exploration Block 2 recently awarded in Mexico. The deal is worth about US$2.2 billion, says Total.

In addition, the two companies will use their expertise in deepwater to jointly develop solutions for long subsea tie-backs, reservoirs with high CO2 content and digital geosciences data management.

The moves were agreed under a so-called Assets Package Agreement, as part of a framework in a Strategic Alliance, announced in October 2016.

Wood Mackenzie's Dr Valentina Kretzschmar said: "Following a period of deep cuts, which helped bring down Total’s cash flow breakevens to a sustainable level, the company is now shifting its strategy towards more aggressive business development.

"A rebound in oil prices, combined with a new phase of strong cash flow growth, will fuel Total’s new business development opportunities. Pre-salt deepwater Brazil offers access to low-cost, long-life resources, and will help shift Total's portfolio to the lower end of the cost curve - in line with the company's strategy."

Total and Petrobras already jointly participate in 19 consortiums globally, in exploration and production. In Brazil, the companies are partners in the development of the giant Libra field, which is the first Production Sharing Contract in the Brazilian pre-salt Santos basin.

Outside Brazil, Petrobras and Total are partners on the Chinook field in the US Gulf of Mexico, on the deepwater Akpo field in Nigeria and on the gas fields of San Alberto and San Antonio/Itau in Bolivia, as well as in the Bolivia-Brazil gas pipeline.

Patrick Pouyanné, Total chairman and CEO, said: “These agreements will reinforce Total’s position in Brazil through access to outstanding pre-salt resources while entering the promising gas value chain. I’m confident that both companies will be able to create significant value by sharing their technical expertise, leveraging operational excellence and further reducing costs.”

Under the agreement, in the downstream sector, Total will acquire from Petrobras some regasification capacity in the Bahia LNG terminal and a 50% interest in two co-generation plants in the Bahia area as well as pipeline transport capacity, enabling Total to supply gas to the two co-generation plants.

Total has been present in Brazil for over 40 years. In 2013, the company increased its presence in the country by acquiring 11 new exploration areas, including the Libra field, and currently has a portfolio comprised of 17 offshore blocks.

Read more:

First production at Petrobras' Lapa

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2018-09-23 08:54:59pm