Chinese state-owned CNOOC and CNODC will pay $2.94bn to Brazil's state-controlled Petrobras for past development costs at the Buzios pre-salt field under a new agreement that the government hopes will ease investor uncertainty ahead of another pre-salt offering in December.
The 11 June co-participation agreement sets recoverable reserves in Buzios at more than 11bn bl of oil equivalent (boe).
In a November 2019 auction, Petrobras took a 90pc operating stake in excess reserves in the Santos basin pre-salt cluster known as Transfer of Rights (TOR). CNOOC and CNODC evenly split the remaining 10pc. The three companies paid R68.2bn ($17.1bn) for the right to produce amounts beyond the 3.15bn boe originally contracted to Petrobras.
In 2010, the federal government directly awarded Petrobras 5bn boe in production rights from the TOR deposits, of which Buzios is the largest. Petrobras leveraged the deal — worth R75bn ($42bn at the time of the transaction) — to raise around R120.25bn through a landmark share offering.
In addition to the 3.15bn boe to be produced under the preferred TOR contract model, Petrobras and its Chinese partners plan to produce around 8.15bn boe under the production-sharing contract awarded in 2019.
The firms pledged the minimum 23.24pc of profit oil—total production less approved costs—when awarded the Buzios excess reserves in 2019. Profit oil, the deciding factor in PSC auctions, is paid to state-owned pre-salt marketing firm PPSA over the life of the contract. PPSA was also a signatory to the Buzios co-participation agreement.
The Chinese companies and Petrobras determined that compensation qualifying as cost oil for the purposes of the Buzios PSC totalled $29.4bn. CNOOC and CNODC will pay 10pc of that amount to Petrobras in cash by the 1 September effective date of the new agreement.
Following regulatory approval, Petrobras will hold a 92.6pc operating stake in Buzios. Each Chinese firm will hold 3.7pc.
Petrobras is targeting around 2mn b/d of Buzios production by 2030. The field currently produces 555,000 b/d of 28°API crude through four 150,000 b/d platforms. Another four platforms are scheduled to be deployed by 2025.
Second chance
On 17 December, regulator ANP will relaunch tenders for the Sepia and Atapu pre-salt fields that failed to attract bids in the 2019 TOR auction, an outcome partially attributed to uncertainty over how much would be owed to Petrobras for past development.
Petrobras has already exercised its right of first refusal for a minimum 30pc operating stake in both fields.
In an April agreement, Petrobras and PPSA pegged past development costs at Atapu at around $3.25bn and $3.2bn for Sepia. Around 31.3pc of Sepia reserves and 39.5pc of Atapu are covered by the TOR contract, the remainder by the PSC.
A fixed R7.13bn ($1.41bn) signing bonus has been set for Sepia and R4bn for Atapu. The minimum profit oil percentage for the government is 15.02pc for Sepia and 5.89pc for Atapu.
