Brazilian state-controlled oil giant Petrobras and its partners BG Group, Petrogal Brasil and Repsol Sinopec will sign 10 contracts worth $4.5 billion for the construction of oil vessel processing plants.
Petrobras said in a securities filing that the contracts, to be signed in the coming days, are for the construction and integration of processing plants that will sit atop eight floating production, storage and offloading (FPSO) vessels, which are to be used to develop Brazil’s ultra-deepwater, “pre-salt” reserves.
According to the filing, the FPSOs are being built at the BM-S-9 and BM-S-11 blocks in the Santos Basin, off the coast of Sao Paulo state.
Petrobras said the consortium developing the BM-S-11 block, made up of Petrobras, Britain’s BG Group and Portugal’s Petrogal Brasil, also has begun the process of contracting an additional FPSO.
Petrobras is the operator of the BM-S-9 block with a 45 percent stake, while BG Group and Spanish-Chinese oil venture Repsol Sinopec have 30 percent and 25 percent interests, respectively.
The pre-salt fields – distributed across roughly 160,000 sq. km – are estimated to hold tens of billions of barrels of crude and could potentially transform Brazil into a major crude exporter.
But accessing the fields will be very costly and pose an enormous technical challenge because they are located at depths of up to 7,000 m under a shifting layer of salt.
A 2010 law declares the pre-salt reserves discovered in recent years to be state property and states that they will be explored and developed by consortiums in which Petrobras will have a minimum 30 percent stake.
The legislation established a production-sharing model in which the consortiums must give the Brazilian government a percentage of the extracted crude. They will also be required to make royalty payments.
Under the legislation, Petrobras is the operator of all projects and also can be awarded exploration contracts without a competitive bidding process.