News

17/08/2015

Huge interest for PPSA seminar

The role and activitites of Pré-Sal S/A (PPSA) was discussed during breakfast seminar on August 12, 2015.

The Brazilian federal body Pré-Sal S/A or «PPSA» was founded in 2013 to represent the interests of the federal government in consortiums of the Brazilian production sharing regime, and more than a 100 people were present for the breakfast seminar dedicated to the topic, organized by NBCC, Intsok, Innovation Norway, The Consulate General, Abran and Norwegian Maritime Exporters in Rio de Janeiro on August 12, 2015.

In detail the director of the federal body, Mr Edson Nakagawa, explained the role and current activities of the PPSA to the audience. He outlined the history of the Brazilian pre-salt fields and explained the different regulatory regimes in place on the Brazilian continental shelf. The very first pre-salt discovery was made in the Santos Basin in 2005, and production started on the Jubarte field in 2008. Two years later, the federal government created the production shorting regime, and PPSA was established.

«We have three different regulatory regimes in Brazil; The Concession regime from 1997 with no obligations of Petrobras participation, the «Transfer of rights» regime from 2010, where licenses were granted directly to Petrobras for the company to produce up to five billion barrels of oil in six different areas, and the «Production sharing» regime, applicable to areas not granted to concession in the Pre-Salt Polygon of Campos and Santos Basins. In the production sharing regime it is required that Petrobras is field operator and has a minimum share of 30 percent, and this is where the PPSA comes in as a consortium member to represent the state´s interests. The state gets a share of the profit, which goes to social funds for education and health», Mr. Nakagawa explained.

It is also the responsibility of the PPSA to manage these production share agreements (PSAs), to manage the commercialization agreements of the state profit, the contracts with the trading agent, and also to represent the state in so-called unionization agreements. 

«The goal is always to maximize the economic result of the state», Mr. Nakagawa (in the photo to the left) said.

 The Libra case
The Libra field is so far the only PSA, and state participation is about 40 percent, depending on the oil price. Libra was discovered in 2011, and turned out to be the largest pre-salt field in the Santos Basin with estimated recoverable reserves of 8 billion to 12 billion barrels. During the 11th ANP licensing rounds in 2013, the 35 year production sharing contract was awarded Petrobras (40 percent), and non-operating members Total (20 percent), Shell (20 percent), and China’s CNPC and CNOOC (10 percent each) .

PPSA participates in the operational committee of the consortium, chairs this committee and even has a 50 % vote and the right to veto.

«We do have a significant participation, but we do not decide everything by ourselves», Mr. Nakagawa argues.

The PPSA also manages and audits E&P plans and supervises the execution, and is responsible for the target accomplishment assurance of the local content requirements in place.

«The main challenges we are facing on Libra is the conflict between the need for fast-track development and the local content requirements. But PPSA can also ask for waiver if we see that it is not possible to comply with the requirements.We need to work hard to consolidate the local content requirements with the need for field development»

R&D
The PPSA also plays a part when it comes to research, technology and innovation.

«We believe there a lot of opportunities for working together with Norwegian companies here. As you know, oil companies in Brazil has to use 1 percent of their GDP on research and development, and in the Libra scenario, there are several opportunities», he said, and listed several technological challenges on the agenda, like riser systems og flow assurance, imaging, the need for reducing the cost of intervention in high production wells and gas processing where there are high volumes of associated gas. 

Pre-salt gas utilization is also of crucial relevance to PPSA and the Brazilian federal authorities, and technology opportunities should emerge

 Insight on Norway
The first part of the seminar was dedicated to a presentation of Team Norway, and as Consul General Helle Klem said in her opening address to the event, hopefully the presentations would provide Mr. Nakagawa with more insight on Norwegian industry and institutions. 

«We are proud of the considerable Norwegian presence in Brazil and our two countries are a good match, that enjoy a long term relationship in the oil and gas sector», Mrs. Helle Klem said.

Mr. Rune Andersen talked about the role of Innovation Norway, a public door-opener for Norwegian companies, giving grants, loans and advice, and also providing Norwegian companies with a soft landing when establishing in Brazil, through the business incubator office in the Rio Sul business tower.

«Brazil is the third largest single market for Norwegian suppliers, and it is still growing», Mr. Andersen said.

Intsok was presented by Brazil adviser Adhemar Freire, who explained that Intsok is a non-profit organization created to promote successful international expansing for players in the Norwegian oil and gas industry, and present in Brazil since 1998.

«Intsok includes 250 independent companies and their subsidiaries, and is a result of willingness to share experiences», Mr. Freire said.

NBCC president Camila Mendes Vianna Cardoso presented NBCC to the seminar, and explained how the chamber promotes business events and activities on a variety of subjects of interest.

«This year we went abroad for the first time to attend the most important maritime exhibition in Oslo. We also commemorated our 20 year anniversary this year», she said.

Abran, the association of Norwegian shipowner´s in Brazil, was presented by general manager Ricardo Cesar Fernandes.

«Abran was established two years ago by the Norwegian Shipowners´Association and 15 founding members, to foster sustainable and profitable business for our members. Norway has an advanced maritime fleet with a global presene, and in 2014, 3000 port calls were made by Norwegian vessels in Brazil», he said.

The closing remarks at the seminar were given by Adhemar Freire and Camila Mendes Vianna Cardoso.

«There seems to be plenty of opportunities, especially within the field of R&D. All of us present here today would also like to contribute to opening doors for PPSA to Norway and Norwegian stakeholders», Mr. Freire said.

By Runa Hestmann, NBCC journalist
(runa.tierno@nbcc.com.br)

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