Total, Petrobras Define Fields for Strategic Mix
Brazil's state oil company Petrobras and French Total have now named the Brazilian assets that Total is to acquire in the strategic alliance of December 2016, after signing contracts totalling $2.225bn February 28. The alliance is intended to allow both companies to combine their internationally recognised expertise on all segments of the oil and gas value chain in Brazil and internationally, Total said March 1.
Total will acquire 22.5% of the Iara block, comprising the Sururu, Berbigao and Oeste de Atapu fields, which are being unitised with the Petrobras-owned Entorno de Iara area in Block BM-S-11. Petrobras will continue to be operator with 42.5%. Anglo-Dutch Shell has 25% and Petrogal 10% of the consortium.
Total will also acquire 35% of the Lapa field concession area in Block BM-S-9 and will also transfer the operatorship to Total while Petrobras will remain in the license with 10%. The Lapa field started up in December 2016 but now needs Total's experience in deep-offshore projects, as Lapa "presents distinct characteristics from other pre-salt fields." The other partners are Shell with 30% and Repsol-Sinopec Brasil, with 25%.
Total will also acquire 50% of two cogeneration plants in Bahia, connected to the regasification terminal in Sao Francisco do Conde, also in Bahia where Total will take regasification capacity to supply gas to the power plants. This integrated joint venture will represent an innovative partnership in the Brazilian gas and power market.
The above contracts come on top of those already executed December 21, such as: (i) the option for Petrobras to purchase 20% interest in block 2 of the Perdido Foldbelt area, in the Mexican sector of the Gulf of Mexico, (ii) joint exploration studies in the exploratory areas of Equatorial Margin and in Santos Basin; and (iii) a technological partnership agreement in the areas of digital petrophysics, geological processing and subsea production systems.
The two CEOs, Petrobras' Pedro Parente and Total's Patrick Pouyanne, said the "new partnerships together with a reinforced technological co-operation should create significant synergies and values, mutualising our operational excellence and further reducing costs on our joint projects for the benefit of both companies”.
The payment is made up of $1.675bn cash for assets and services; $400mn that can be triggered to carry a part of Petrobras’s investment share in the Iara development fields and $150mn as contingent payments.
The conclusion of the operation is subject to approvals by the relevant regulatory entities, potential exercise of pre-emptive rights by current Iara partners in addition to other preceding conditions.
Petrobras said the strategic alliance was an important part of the Petrobras’ 2017-2021 business and management plan, to enhance the sharing of information, experiences, and technologies, to advance corporate governance strengthening, and to improve the company's ability to raise finance through risk mitigation and cash inflow.
Total said the new partnerships with Petrobras reinforced its position in Brazil through access to new fields in the Santos Basin while entering the promising gas value chain.
William Powell