Oil Giant Petrobras Strategies Abroad

Jorge Luiz Zelada, International Director of Petropbras | Photo: Courtesy of Agencia Petrobras de NotIcias

RIO DE JANEIRO – Active in 27 foreign countries in five continents, Petrobras has offices in New York, London, Tokyo and Beijing and is currently exploring in the Gulf of Mexico, the west coast of Africa, Latin America and Australia.

Of its total Brazilian production last May, 1,993,222 barrels per day were oil, while natural gas production reached 56.163 million cubic meters per day. Abroad, the company’s average oil production reached 151,077 barrels per day and its natural gas production reached 17.4 million cubic meters per day. These figures reflect the fact that since 2007, when Petrobras announced massive pre-salt oil and gas discoveries, the company has drastically reduced its foreign investment.

In the Americas, Petrobras is present in Argentina, Bolivia, Chile, Colombia, Curaçao, the United States, Mexico, Paraguay, Peru, Uruguay and Venezuela. Petrobras produced 89,000 barrels per day of oil and 16.5 million cubic meters per day of natural gas in 2011 from eight of these territories.

“In Argentina, Bolivia, Colombia, Peru, Uruguay and Venezuela Petrobras is involved in 75 exploration and production contracts, with the greatest concentration in Argentina and Colombia, in onshore areas. Of this total, we are operators for 39 contracts, more than half  of which are in exploration,” Jorge Luiz Zelada, Petrobras’ international director, told Latin Trade.

“In Argentina, Petrobras production is 50 percent barrels of oil equivalent per day and 50 percent gas. In Peru and Colombia, we cu-rrently produce oil, though we have exploration areas focused on onshore and offshore gas production,” he said.

ADVANTAGES
Petrobras generates just 6 percent of its daily production from international projects in the Gulf of Mexico, West Africa, South America, and Australia. The benefit of such international ventures comes through geological and technical knowledge gained from its partnerships with other companies, added Zelada.

Petrobras’ investment program, designed to reach the growth targets of its 2012-2016 business plan, adds up to $236.5 billion. Only  $6 billion is destined for overseas activities, with a focus on the United States, Latin America and West Africa.

The company expects to produce 388,000 barrels per day abroad until 2020, Pedro Augusto Bastos, general manager for business development of Petrobras’ International Area told Latin Trade.

Jose Formigli, the new exploration and production director, recently told journalists that Petrobras is more of an energy conglomerate than an oil company. In addition to being the country’s dominant petroleum player, it has the eighth largest installed capacity in electric power generation in Brazil, and accounts for 22 percent of ethanol distribution, plus 100 percent of the biodiesel market.

“Clearly, the more intensely Petrobras pursues its strategy to consolidate its position as an energy company, with a strong participation in the biofuel business, the more crucial and influential its actions will be in the energy market,” he said.

GULF OF MEXICO
On Feb. 25, Petrobras started production at its Cascade field in the Gulf of Mexico, using FPSO BW Pioneer –the first floating production, storage and offloading system in the Gulf. The FPSO is connected to Cascade Well No. 4.

The well lies 155 miles from the Louisiana Gulf Coast, and as it is 1.5 miles below the surface, it’s cheaper to use shuttle tankers to get the oil ashore, as opposed to a pipeline.  The vessel is capable of processing 80,000 barrels of oil and 17 million cubic feet of gas daily. The gas comes ashore via a pipeline.

Last April Brazilian President Dilma Rousseff and the new Petrobras president Maria das Graças Foster (a 32-year Petrobras veteran)   visited the United States and strengthened ties towards future oil and gas cooperation.

President Obama made it clear the U.S. wants to invest in Brazil’s oil sector, particularly the pre-salt area. At present, the pre-salt is producing 180,000 bpd through long duration tests.

At a seminar last April, Investing in África: Opportunities, Challenges and Instruments for Economic Cooperation, in Rio de Janeiro, Foster said that Africa is an “exceptional new market and a great opportunity not only for Petrobras but for other companies”. Foster highlighted success in petroleum operations, and important discoveries in Ghana and Uganda.

Petrobras is also active in other African countries, like Nigeria, and invests in biofuels in Mozambique. At present, it explores and produces in offshore Angola, Benin, Gabon, Libya, Namibia, Nigeria and Tanzania.  In Nigeria, Petrobras produces around 58,000 barrels per day.  In Angola produces 2,000 barrels per day and also is involved in biofuels and importation of natural gas.

Foster pointed out that “there is great geological similarity between the existing accumulations offshore Brazil with the accumulations being discovered in West Africa”.

Petrobras geologists believe these similarities came about when the single southern subcontinent, dubbed Gondwana, began to split into Africa and South America. The geological structures in the pre-salt generally have remained unchanged since this separation started some 165 million years ago, experts say.