Petrobras swaps Itapu for Tupi in platform buyout

Brazil's state-controlled Petrobras will acquire a production platform originally earmarked for the Tupi pre-salt field from partners Shell and Galp for around $353mn, an unexpected change in the development of the pre-salt giant.

The 150,000 b/d P-71 floating production, storage, and offloading (FPSO) unit will now be installed in the Itapu field in the Santos basin cluster known as the Transfer of Rights (TOR). The platform is now in the final phase of construction at the Jurong Shipyard in Espirito Santo state.

The move means that first oil from the wholly-owned Itapu field will come in about one year, instead of in 2024 as originally planned.

Petrobras holds a 65pc interest in the BM-S-11 block where Tupi, formerly known as Lula, is located. Shell holds a 25pc working interest and Galp the remaining 10pc.

The consortium plans to submit a revised development plan for the Tupi field to oil regulator ANP in 2021.

"This initiative seeks to implement complementary production development projects resilient to low oil prices, allowing to further increase the recovery factor of the field," Petrobras said.

Shell will receive around $252mn from the platform sale by the end of 2021. The company says the sale and revised development plan are aligned with its cash preservation strategy.

"[We] continue to seek growth opportunities at the right time, whether in existing assets, such as Tupi, or in the next auction rounds," Shell's director of pre-salt assets Cristiano Pinto da Costa said.

Responsible for around 1mn b/d of 31˚API crude, Tupi is still Brazil's biggest oil and natural gas producer, but production from nine FPSOs is estimated to have peaked at the end of 2019. The Tupi consortium has been considering interventions to improve the recovery factor at the field since last year.

The acceleration of the Itapu development reflects Petrobras' pursuit of lower production costs.

In 2010, the federal government directly awarded Petrobras 5bn bl of oil equivalent (boe) in production rights from the six Santos basin areas that make up the TOR region. The contract governing the reserves is considered one of the most preferential in the country.

Petrobras went solo for the excess reserves in the Itapu block during last year's TOR auction. The field is estimated to hold recoverable reserves of around 900mn boe.

By Nathan Walters