Global Oil & Gas Market Update Roadshow!

Brazil Oil and Gas on the way up – What can

NORWEP do to support partners
Adhemar Freire, Brazil Country Manager
adhemar.freire@norwep.com
Scandic Kristiansand Bystranda | 6 September 2017
Agenda

1. Country overview
2. E&P overview
3. Policies in place and impact on business
4. Coming bid rounds
5. Opportunities
6. How NORWEP can support our partners
7. Final Remarks

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Country Overview
Country outlook - challenges
• Deep prolongued economic recession
• Challenging fiscal imbalance
• Political turmoil
• Corruption scandal “lava jato” (car wash operation)
• High unemployment rate
• Complex legal and regulatory framework
• Complex tax regime
• Logistics challenges
• Low oil price
• Geopolitical risks
Country outlook - opportunities
 Lower inflation and interest rate (SELIC)
 Pre-salt fields production
 Petrobras turnaround
 Petrobras divestment plan
 Adjustments in legislation
 9 bidding rounds scheduled (2017/2018/2019)
 Permanent offer of exploration areas
 Local content adjusted
 Program Gas para crescer “Gas to grow”
E&P Overview
Country E&P overview
• Oi Production : 2.5 Mbpd
• Gas Production: 101 Mm3/d
• Reserves: Oil 12.7 Bbbl / Gas 378 Bm3
• Economic groups in E&P activities: 95
• Foreign Companies: 48
• Sedimentary Basins: 29
• Exploratory Blocks: 311
• Fields: 443
• Wells: ~30.000
• Offshore Production Platforms: 143
Country E&P overview – Oil Production
Country overview – Pre-salt

Source: ANP
Drastic Reduction in Activity
5 years without licensing bidding rounds
Policies in place and impact on business
National Policies in Place
Upstream
• E&P National Policy  
• Onshore E&P Policy (Reate) – revitalization program      
• Transfer of Rights Renegotiation
• Local Content Policy 
• Tax Regime Renewal (Repetro)
•   2017‐2019 Bidding Rounds 
• Unitization Agreements
• Petrobras’ Right of First Refusal (Pre‐salt Operatorship)

Midstream
• “Gas para Crescer” program (Gas to grow) o
Framework improvements with impact on business
Local Content review
New policy for the 14th bidding round and following

For previous round - negotiations on going (Public hearing)

Coming bid rounds
Bidding rounds already scheduled

2017 2018 2019

Concession Bidding Rounds

14th:   15th:  16th: 
27 September May Q3

Production Sharing Bidding Rounds

2nd and 3rd:  4th:  5th: 
27 October May Q3
14th Bidding Round (Concession)

• Scheduled for Sept, 27 ‐ 2017
• 32 Oil Companies registered and approved to bid
• 287 Exploratory Blocks
• 11 Sedimentary Basins
5 Offshore
6 Onshore
• Lower local content percentage
• Opportunities for new comers as operators (Exxon, e.g.)
Production Sharing Contract bidding round - Pre-salt
Areas to be unitized
• Carcará – estimated in place volumes: 2,2 Bbbl (exploration phase)
• Gato do Mato (exploration phase)
• Sapinhoá (in production: 25.000 bbld
• Tartaruga Verde (under development; first oil in 2017)

New areas
• Alto de Cabo Frio Oeste
• Alto de Cabo Frio Central
• Pau Brasil – unrisked in place volumes: 4.1 Bbbl
• Peroba – unrisked in place volumes: 5.3 Bbbl
Opportunities
Several impediments to foreign investments lifted – Offshore market to grow by 3% p.a.

Offshore market in Brazil 2012-2021

USD billion
45
Operations
Well
40
Subsea
EPC and Topside Equipment
35
Reservoir and Seismic

30

25

20

15

10

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: Rystad Energy research and analysis

1
Number of wells expected to double towards 2021 driven by exploration activity

Offshore wells in Brazil 2012-2021

Number of wells

180

Exploration
150
Wet
Dry
120

90

60

30

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

2
Green and mature fields opportunities
Several opportunities in the OPEX

Source: Petrobras
Petrobras Business Plan – 19 new Production Units

Source:  Petrobras Strategic Business and Management Plan 2017‐2021
 O&G Companies Operating in Brazil
Mb/d

2017

Producers Other Operators

How NORWEP can support our partners
Deliveries
 Assist companies to explore opportunities with Petrobras – Strategic and
Planning
 On going Seminar on Decommissioning and Late Maintenance of
Offshore assets in operation – Nov 6th
 On going Network meeting with Statoil Supply Chain area – End of
October
 FPSO for Sepia and Libra – we are working to promote partners
capabilities to the chartering company to be contracted – in Houston
and Singapore
 Assist companies with market assessment
 Under evaluation for 1H 2018 – Seminar on Digital Solutions
Final Remarks
Conclusions
 Companies must value the short term perspective but also the medium
and long term
 Local content rules must be analyzed on each specific situation and local
services and after sales must be considered in the Business Plan
 It has been developed a framework in order to create a better business
environment, with more transparency and predictability
 Risk management is still something to care, however you may get inspired
by foreign companies which have succeed in the Brazilian market
 Confidence in excess may be a mistake, but pessimism will not bring you
to the business
 Brazil is the biggest offshore market in the years to come
Adhemar Freire, Brazil Country Manager
adhemar.freire@norwep.com
Kristiansand | 6 Sept 2017

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